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CS Professional · IFSCA - Regulations, Listing and Compliances · Capital Market Intermediaries

Zenith Advisors in GIFT IFSC plans to do three things: (a) manage a public offer of securities by an issuer including due diligence and prospectus preparation, (b) underwrite the issue, and (c) maintain the record of applications and allotments for the same issue. Which analysis is correct on the functions?

Managing the offer and underwriting are merchant banking-type functions, while keeping application and allotment records is the separate role of a registrar to an issue. Brokers, trustees, rating agencies, depositories and clearing bodies do not perform these particular functions in a public offer.

  1. A(a) and (b) are merchant banking-type functions, while (c) is the distinct function of a registrar to an issueCorrect
  2. BAll three are exclusively functions of a stock broker
  3. C(a) is a debenture trustee function and (c) is a rating function
  4. D(b) and (c) are depository functions while (a) is a clearing function

Explanation

Issue management with due diligence and prospectus work, and underwriting, are associated with a merchant banker. Handling applications, allotment and refund records is the registrar to an issue's role. The stock broker option is wrong because brokers trade for clients, and trusteeship, rating, depository and clearing do not match these tasks.

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