NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation
Under the depository system, in a pledge of dematerialised securities, what is the person who creates the pledge by offering securities as security for a loan called?
The person who creates the pledge by offering demat securities as collateral for a loan is the pledgor, normally the borrower. The lender who accepts the securities as security is the pledgee. The two terms are not interchangeable.
- APledgorCorrect
- BPledgee
- CBeneficial owner's nominee
- DClearing member
Explanation
The borrower who offers securities as collateral is the pledgor, while the lender who accepts them is the pledgee. The pledgee is the lender, so it is not the answer. Nominee and clearing member are unrelated roles.
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