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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market

Which of the following best describes the role of a clearing corporation in the Indian capital market?

A clearing corporation determines members' obligations from trades and guarantees settlement by acting as the central counterparty. Holding securities in electronic form is the depository's role, while regulation belongs to SEBI, so only the clearing and guarantee description fits the clearing corporation.

  1. AIt guarantees and settles trades executed on the exchange by determining obligations of members and acting as counterpartyCorrect
  2. BIt maintains investors' securities in electronic form and processes demat requests
  3. CIt frames listing rules for companies seeking to raise capital from the public
  4. DIt acts as the primary regulator of all stock brokers and depositories

Explanation

A clearing corporation computes the obligations of members and, through novation, becomes the counterparty and guarantees settlement. Holding securities in electronic form is the depository's function. Listing norms and regulation are the domain of exchanges and SEBI respectively.

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