NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market
Which entity under the Indian securities market structure holds securities in electronic form on behalf of investors and facilitates transfer by book entry?
A depository holds investors' securities in electronic form and transfers ownership by book entry through depository participants. NSDL and CDSL are the two depositories in India. Clearing corporations manage trade settlement and exchanges provide trading platforms, so neither is the correct answer.
- AClearing corporation
- BDepositoryCorrect
- CStock exchange
- DRegistrar and transfer agent
Explanation
A depository such as NSDL or CDSL holds securities in dematerialised form and effects transfer through book entries via depository participants. A clearing corporation handles the obligations and settlement guarantee of trades, not holding of investor securities as such. Exchanges provide trading platforms.
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