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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement

Ms. Rao bought shares in a market trade. On pay-out day, how do the shares reach her demat account?

On pay-out, the clearing corporation credits securities to the clearing member's pool account, and the broker then transfers them to the client's demat account, or the depository credits the client account directly under direct pay-out. No new issue, demat request or certificate is involved.

  1. AThe clearing corporation sends pay-out to the clearing member pool account, and the broker then transfers to her account by an off-market instruction, or directly by the depository where the pay-out is credited directly to the clientCorrect
  2. BThe company issues new shares in her name
  3. CShe must lodge a dematerialisation request
  4. DThe exchange mails her a certificate

Explanation

The clearing corporation gives pay-out to the clearing member's pool account (or directly to the client account under direct pay-out), after which the broker transfers the shares to the client if required. Demat requests and certificates are irrelevant.

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