NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Market Participants in the Securities Market
Which market participant stands between the buying and selling clearing members after trades are novated, becoming the legal counterparty to each, and guarantees settlement of trades in the cash segment of an exchange?
The clearing corporation is the participant that becomes the central counterparty after novation and guarantees settlement. It acts as buyer to every seller and seller to every buyer, removing counterparty risk, unlike depository participants or custodians who perform different functions.
- AClearing corporationCorrect
- BDepository participant
- CCustodian
- DStock exchange listing department
Explanation
Through novation, the clearing corporation becomes the buyer to every seller and the seller to every buyer, and it guarantees settlement. A depository participant only handles demat accounts, a custodian serves institutional clients, and a listing department deals with issuers.
Did you get it right without looking?
One question tells you little. A timed set on Market Participants in the Securities Market shows your real accuracy, how long you take and where you lose marks.
More Market Participants in the Securities Market questions
- Which entity acts as the legal counterparty to every trade accepted for clearing on a recognised stock exchange, thereby guaranteeing settle…
- Which market participant acts as the legal owner of the assets of a mutual fund scheme on behalf of unit holders and holds them in custody t…
- A stock broker receives Rs 5,00,000 from a client for buying shares. Under SEBI rules on client funds, what must the broker do with this mon…
- A stock broker wants to hold clients' funds and securities. Under SEBI rules on client money, which practice is correct?
- In the Indian securities market, which entity acts as the legal counterparty to every trade through novation once the trade is accepted for …
- A trading member's client defaults and the member is unable to meet its obligation to the clearing corporation. Which fund maintained by the…