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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository

Which statement best describes the relationship between a depository and a depository participant (DP) in India?

A depository participant is an agent of the depository that provides depository services to investors, such as opening demat accounts and processing transfers. It is not a regulator, a registrar maintaining the issuer's register, or a settlement guarantor.

  1. AThe DP is an agent of the depository and offers depository services to investorsCorrect
  2. BThe DP is a regulator appointed by the depository to supervise investors
  3. CThe DP is the issuer's representative who maintains the register of members
  4. DThe DP is a clearing member who guarantees settlement of trades

Explanation

Under the Depositories Act, a DP acts as an agent of the depository and is the intermediary through which investors access depository services. Opening accounts, processing demat requests and transfers happen via the DP. Maintaining the register is the work of the depository or issuer's registrar, and guaranteeing settlement belongs to the clearing corporation.

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