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NISM Certifications · NISM-Series-VI: Depository Operations · Depository and its Business Partners

Which statement about a Depository Participant (DP) and its relationship with the depository is correct?

A DP acts as the depository's agent and must be registered with SEBI, operating under an agreement with the depository. Even banks need registration to act as DPs, and a DP never becomes the owner of client securities, which stay in the investor's account.

  1. AA DP acts as an agent of the depository and must be registered with SEBI, with the depository's rules binding it through an agreementCorrect
  2. BA DP is an agent of the investor only and has no agreement with the depository
  3. CA DP is exempt from SEBI registration if it is a bank
  4. DA DP can hold investor securities in its own name as registered owner

Explanation

A DP is registered with SEBI and enters into an agreement with a depository to act as its agent, offering services to investors. Banks also need registration to act as DPs. The DP cannot become registered owner of client securities, which are held in the investor's beneficial owner account.

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