NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners
Under the Depositories Act, 1996, how is the relationship between a depository and its depository participant best described?
A depository participant acts as the agent of the depository and provides the interface through which investors obtain depository services. It is not the principal, a regulator, or an issuer's subsidiary, so the agency relationship runs from DP to depository.
- AThe depository participant is the agent of the depositoryCorrect
- BThe depository participant is the principal and the depository its agent
- CThe depository participant is a regulator of the depository
- DThe depository participant is a subsidiary of the issuer
Explanation
A DP is an agent of the depository and acts as the investor's gateway to depository services. The depository is not an agent of the DP, and the DP does not regulate the depository. DPs have no link to issuers as subsidiaries.
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