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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement

Ms. Banerjee wants to transfer shares to a friend's demat account at another DP through an off-market transaction without any trade on the exchange. Which statement about this transfer is correct?

An off-market transfer is carried out by giving a delivery instruction that names the receiving beneficiary account and its DP. It bypasses exchange settlement, needs no exchange trade or physical conversion, and works across different DPs, so the other statements are incorrect.

  1. AIt requires a trade on the stock exchange to be valid
  2. BIt is done through a delivery instruction specifying the receiving beneficiary account, and does not go through the exchange settlementCorrect
  3. CIt can be done only after converting the shares to physical form
  4. DIt is allowed only between accounts held at the same DP

Explanation

Off-market transfers are executed by the delivery instruction naming the target beneficiary account ID and DP, outside exchange settlement. They need no exchange trade, no rematerialisation, and can be made across DPs and across depositories.

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