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NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners

Ms. Kavita Rao wants to open a demat account and approaches a depository participant. With which party does the depository directly maintain its contractual relationship for providing services to the investor?

The depository deals with investors through depository participants, with whom it has an agreement. The investor enters into an agreement with the DP when opening the account, not directly with the depository, issuer, exchange or clearing member.

  1. AThe depository participant, through an agreement between depository and DPCorrect
  2. BThe investor directly, through an agreement with the issuer
  3. CThe stock exchange, through its listing agreement
  4. DThe clearing member, through a settlement guarantee

Explanation

Depositories offer services to investors only through depository participants, with whom they sign an agreement. The investor signs an agreement with the DP when opening the account. The investor has no direct contract with the depository for routine services.

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