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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market

Mrs. Latha Menon asks why trades in the Indian equity market are settled in demat form. Which of the following is a recognised benefit of holding securities in dematerialised form compared with physical certificates?

The recognised benefit of demat holding is the elimination of risks tied to physical certificates, such as forgery, theft, loss and bad delivery, along with faster and cheaper transfers. It does not guarantee profits, waive charges or remove market price risk.

  1. AElimination of risks such as forgery, theft, loss and bad delivery of certificatesCorrect
  2. BGuaranteed profit on every share transaction
  3. CExemption from all transaction charges
  4. DAutomatic immunity from market price fluctuations

Explanation

Dematerialisation removes physical certificate risks like forged, lost, stolen or bad-delivery shares, and speeds up transfer. It does not guarantee returns, remove charges or protect against price changes.

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