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 depository participant rather than of a stock broker?
Opening demat accounts and processing delivery instruction slips is a depository participant's function. The DP acts as the depository's agent for holding and transferring securities in electronic form. Executing orders is for brokers, and obligations and circuit limits are handled by the clearing corporation and exchange.
- AExecuting a client's buy order on the exchange platform
- BOpening a demat account and processing delivery instruction slipsCorrect
- CComputing the member's obligation after novation
- DSetting the circuit limits on stocks
Explanation
A depository participant acts as the agent of the depository, opening demat accounts and executing transfer instructions given by account holders. Order execution is a broker task, computing obligations is done by the clearing corporation, and circuit limits are set by the exchange.
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