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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Trading and Settlement

Which of the following best describes the role of the DP when a client buys shares in a rolling settlement on the exchange?

The DP executes depository instructions, debiting or crediting accounts as instructed by the client or clearing member in line with settlement obligations. It does not fix trade prices, act as counterparty or guarantee settlement, which are the clearing corporation's roles.

  1. AThe DP decides the trade price and quantity
  2. BThe DP executes instructions to debit or credit accounts as per the clearing member or client instructions and settlement obligationsCorrect
  3. CThe DP acts as counterparty to the trade
  4. DThe DP guarantees the settlement of the trade

Explanation

The DP processes depository instructions, debiting and crediting accounts on valid instruction. Price and quantity are determined by the trade on the exchange, the clearing corporation acts as counterparty and guarantees settlement, so the other options misdescribe the DP role.

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