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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Market Participants in the Securities Market

Which of the following is a function of a custodian in the securities market?

A custodian safeguards securities and handles trade confirmation and settlement for institutional clients such as mutual funds and foreign portfolio investors, also processing corporate actions. It does not fix prices, regulate brokers, or issue contract notes, which are functions of exchanges, SEBI and brokers.

  1. AFixing the closing price of securities on the exchange
  2. BSafekeeping of securities and settlement of trades for institutional clientsCorrect
  3. CActing as the sole regulator of brokers
  4. DIssuing contract notes to retail investors on behalf of the exchange

Explanation

Custodians hold securities in safekeeping and handle confirmation and settlement of trades for institutional clients such as FPIs and mutual funds, along with related services like corporate action processing. Price fixing is done by exchanges, regulation by SEBI, and contract notes are issued by brokers.

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