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

Ravi sold shares on the exchange on a T+1 rolling settlement basis. He wants to deliver them from his demat account to meet his pay-in obligation. By when must the securities reach the clearing corporation for the settlement to be completed on time?

Ravi's securities must be given in before the pay-in deadline set by the clearing corporation on the settlement day, which is T+1 under rolling settlement. Late delivery causes a shortage and an auction. Delivery cannot wait for payment, and it cannot be made before the trade is executed.

  1. ABy the pay-in deadline fixed by the clearing corporation on the settlement day (T+1)Correct
  2. BAny time within 30 days of the trade
  3. COnly after the broker pays the money to Ravi
  4. DBefore the trade is executed on the exchange

Explanation

Securities must reach the clearing corporation through the broker's pool account before the pay-in deadline on the settlement day. A client is not allowed to wait for the money first. Delivery after the deadline leads to a shortage and auction.

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