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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Dematerialisation

Mr. Shah's DP receives a DRF for 500 shares of a company. The DP finds the certificates are lodged for dematerialisation and, before the request is confirmed, Mr. Shah wants to sell those shares on the exchange. What is the correct position?

He cannot sell or deliver them until the issuer or registrar confirms the demat request and the shares are credited to his account. Only then are the securities available in demat form to deliver in settlement; provisional credit by the DP is not permitted.

  1. AHe cannot deliver them until the shares are credited to his demat account on confirmation of the demat requestCorrect
  2. BHe can sell them immediately because the DRF has been accepted
  3. CHe may deliver the physical certificates to the buyer in market settlement
  4. DThe DP may credit the shares provisionally without issuer confirmation

Explanation

Securities are credited to the BO account only after the issuer or registrar confirms the demat request. Until then they cannot be delivered in demat settlement, and physical shares cannot be used in market settlement of listed shares, which must be settled in demat form.

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