NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository
Ms. Kavita Rao wants to know how the depository and the Depository Participant relate to each other. Which description is correct?
A Depository Participant is an agent of the depository and serves as the link between the depository and investors. It opens demat accounts and processes instructions on the depository's behalf. It is neither a regulator nor a clearing corporation guaranteeing settlement.
- AThe DP is an agent of the depository and acts as the intermediary between the depository and the investorCorrect
- BThe DP is an agent of the issuer company who maintains the register of members
- CThe DP is a regulator supervising the depository
- DThe DP is a clearing corporation guaranteeing settlement
Explanation
Under the Depositories Act and regulations, a DP acts as an agent of the depository and provides the interface to investors for account opening and operations. It is not the issuer's agent, a regulator or a clearing corporation. SEBI is the regulator.
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