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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Clearing Process

Which of the following best describes the role of a clearing bank in the clearing and settlement process of a stock exchange's clearing corporation?

A clearing bank facilitates funds settlement. Clearing members hold designated accounts with it, and the money for pay-in and pay-out of the clearing corporation moves through these accounts. Holding demat securities is a depository role, not the clearing bank's.

  1. AIt provides the funds settlement by holding the clearing members' designated accounts through which pay-in and pay-out of funds take placeCorrect
  2. BIt lists securities on the exchange
  3. CIt maintains investors' demat holdings
  4. DIt decides the circuit limits for securities

Explanation

Clearing banks hold the designated accounts of clearing members in which funds pay-in and pay-out take place. Maintaining demat holdings is the depository's role, and listing and circuit limits are exchange functions.

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