NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation
Ms. Kavita wants to pledge securities through her DP. After she initiates the pledge instruction, what must happen for the pledge to be created in the depository system?
The pledgee must confirm the pledge instruction that the pledgor initiated. Only after the pledgee's confirmation is the pledge created and the securities blocked. No consent from the issuer, SEBI or an exchange is needed for each transaction.
- AThe pledgee must confirm the pledge instructionCorrect
- BThe issuer company must give written consent
- CSEBI must approve each pledge
- DThe stock exchange must register the pledge
Explanation
Pledge creation is a two-step process: the pledgor initiates and the pledgee confirms, after which the securities are pledged. Issuer, SEBI or exchange approval is not needed for the individual pledge.
Did you get it right without looking?
One question tells you little. A timed set on Special Services - Pledge and Hypothecation shows your real accuracy, how long you take and where you lose marks.
More Special Services - Pledge and Hypothecation questions
- In a depository pledge, the BO who creates the pledge in favour of a lender is referred to as the:
- Rohan pledged 500 shares with a bank through his DP. In the depository system, what happens to these shares once the pledge is created and c…
- A pledgor has defaulted on a loan. The pledgee wants to realise the security. Which action does the pledgee initiate through its DP?
- A pledgor wants to close a pledge after repaying the loan. Which statement describes the standard procedure?
- Under the depository pledge process, which party is the 'pledgor' when a client pledges securities held in demat form to obtain a loan?
- A client's shares are pledged to an NBFC. The client repays the loan in full. Which step releases the shares so that they become free in the…