NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository
Which of the following is the primary function of a depository in the Indian securities market?
A depository's primary function is to hold securities in electronic (dematerialised) form and transfer ownership by book entry. This removes physical certificates and risks like theft, forgery and delay. It does not underwrite issues, set prices or lend money to investors.
- AUnderwriting public issues of securities
- BHolding securities in electronic form and enabling their transfer through book entryCorrect
- CFixing the price of securities traded on stock exchanges
- DGranting loans to investors against shares
Explanation
A depository is like a securities bank that holds securities in dematerialised form and effects ownership transfer by book entries. Underwriting, price discovery and lending are not depository functions.
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More Introduction to Depository questions
- Which of the following is a depository in India, as per the structure of the Indian capital market?
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- Which entity acts as the link between an investor and the depository, offering depository services to clients?
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