NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Settlement Process
Which entity guarantees the settlement of trades executed on a recognised stock exchange in India, even if a counterparty clearing member defaults, through its settlement guarantee fund?
The clearing corporation guarantees settlement by acting as the central counterparty and using its settlement guarantee fund and member margins if a member defaults. Brokers, depository participants and registrars do not provide this guarantee.
- AThe depository participant of the buyer
- BThe clearing corporation of the exchangeCorrect
- CThe stock broker who executed the trade
- DThe registrar and transfer agent of the issuer
Explanation
The clearing corporation acts as central counterparty, novating trades and guaranteeing settlement, supported by the settlement guarantee fund and member margins. Brokers and depository participants do not provide this guarantee. Registrars deal with issuer records.
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