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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

Mr. Kapoor bought a corporate bond that is traded on an exchange in demat form. When he sells it, how is the transfer of the bond usually effected?

A dematerialised corporate bond is transferred by a delivery instruction that debits the seller's demat account and credits the buyer's demat account through depository book entries. No physical endorsement or certificate is needed for the transfer.

  1. ABy endorsing a physical certificate and stamping it
  2. BBy a delivery instruction debiting his demat account and crediting the buyer's demat accountCorrect
  3. CBy a letter to the issuer asking for a new certificate
  4. DBy RBI passing an entry in an SGL ledger for the retail client

Explanation

Demat debt securities transfer through depository book entries. The seller's DP processes a delivery instruction, debiting the seller's account and crediting the buyer's account at settlement. Physical endorsement is not used for dematerialised bonds.

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