NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Introduction to Securities Markets
Which of the following best describes the role of a stock exchange clearing corporation in the securities market?
A clearing corporation acts as the central counterparty that guarantees settlement of trades between exchange members. It does this through novation, margining and a settlement guarantee fund. Regulating listings, maintaining demat accounts and managing public issues are functions of other entities such as SEBI, depositories and merchant bankers.
- AIt acts as a counterparty guaranteeing settlement of trades between membersCorrect
- BIt issues securities to the public on behalf of companies
- CIt regulates the listing norms of companies
- DIt maintains the demat accounts of investors
Explanation
A clearing corporation novates trades and becomes the central counterparty, guaranteeing settlement and managing risk through margins and a settlement guarantee fund. Issuing securities is done via merchant bankers, regulation is by SEBI, and demat accounts are held with depositories through depository participants.
Did you get it right without looking?
One question tells you little. A timed set on Introduction to Securities Markets shows your real accuracy, how long you take and where you lose marks.
More Introduction to Securities Markets questions
- A listed company issues new shares only to its existing shareholders in proportion to their current holdings. This method of raising capital…
- An investor buys 200 shares at Rs 500 each, and receives a dividend of Rs 10 per share during the year. At year end the share price is Rs 54…
- Which of the following is a feature of an equity share that distinguishes it from a debenture?
- Which of the following is a money market instrument in India?
- Which statement about the primary market and secondary market in India is correct?
- Which statement about a rights issue by a listed company is correct?