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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository

Ms. Kavita Rao holds shares in physical form and wants to trade them on a stock exchange in India. Which step must she complete before she can sell these shares through the exchange under the normal settlement system?

She must dematerialise the shares through a Depository Participant. Trades on Indian exchanges settle in electronic form, so physical certificates must be converted into electronic holdings in a demat account before they can be sold through the exchange.

  1. ADematerialise the shares through a Depository ParticipantCorrect
  2. BTransfer the shares to a stock broker's physical custody
  3. CObtain a no-objection certificate from the exchange
  4. DRegister the shares with the clearing corporation directly

Explanation

Listed securities are traded and settled in electronic form, so physical certificates must first be converted into electronic holdings. This is done by submitting a demat request to a Depository Participant. The other steps are not required for dematerialisation.

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