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

Ms. Rao, a new investor, asks about the minimum requirement to hold securities in a depository. Which statement is correct?

An investor opens a demat account with a DP of her choice, since investors cannot deal with the depository directly, and she may hold accounts with more than one DP. A trading account is not a prerequisite, and there is no single-account limit.

  1. AShe must open a demat account with a DP of her choice, and one person can open accounts with multiple DPsCorrect
  2. BShe must open a demat account directly with the depository, which does not allow DPs
  3. CShe can hold only one demat account in the whole country
  4. DShe must have a broker's trading account before any DP can open a demat account for her

Explanation

An investor deals with the depository only through a DP, and may open demat accounts with more than one DP, or with different depositories. A demat account can be opened independently of a trading account, and there is no restriction to a single account.

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