Unit ko samjho · NISM Series VI
Depository and its Business Partners
10 questions is unit mein
Sawaal aur jawaab English mein hain, kyunki NISM ka exam paper bhi English mein hota hai.
Is unit mein kya hai
- A retail investor wants to open a demat account and submit securities instructions. The normal customer-facing intermediary is a:
- A stock broker wants to start offering demat account services. Is its stock-broking registration alone sufficient?
- After exchange trades are executed, which entity centrally determines and manages the relevant clearing and settlement obligations?
- A DP has verified a demat request and sent the certificate details for processing. Who validates the underlying issuer records and confirms the request for electronic credit?
- In the standard tripartite arrangement for an issuer using an external RTA to connect with a depository, which parties are involved?
- A DP posts its Rights and Obligations document on its website but provides no copy or required acknowledgement to a new BO. Is the website posting alone an adequate substitute?
- A DP employee enters a client instruction, and a second authorised employee checks the entry against the original instruction before release. What risk does this control most directly address?
- A DP receives a second copy of an instruction already processed. What should be checked before any further posting?
- A DP is discontinuing its service. Which objective should govern handling of existing client holdings?
- An investor asks who determines and distributes a cash dividend entitlement using the beneficial-owner information supplied through the depository. The appropriate answer is:
Zaroori ideas
Practice bank se · 1
A retail investor wants to open a demat account and submit securities instructions. The normal customer-facing intermediary is a:
The DP provides the investor-facing connection to the depository. It undertakes account servicing and processes valid instructions within depository rules. Other market institutions have important roles, but a retail client does not ordinarily open the demat relationship directly with a clearing corporation or rating agency. Remember: Identify the intermediary by the service it is authorised to perform.
Hint Common mistake: Assuming any SEBI-registered intermediary can perform every securities-market function.
VI-021Practice bank se · 2
A stock broker wants to start offering demat account services. Is its stock-broking registration alone sufficient?
Eligibility to apply is different from authorisation to operate. A broker may belong to an eligible class, but it must satisfy the separate DP registration/admission and operational requirements before providing DP services. Neither the broker’s trading registration nor a client waiver substitutes for that process. Remember: Distinguish eligible applicant, approved participant and operational commencement.
Hint Common mistake: Assuming common ownership or branding makes two regulated permissions interchangeable.
VI-022Practice bank se · 3
After exchange trades are executed, which entity centrally determines and manages the relevant clearing and settlement obligations?
The clearing corporation forms the central clearing and settlement layer for exchange trades. Depositories facilitate the securities leg through electronic accounts, while banks support funds settlement. An issuer/RTA records and services its securities but does not independently clear all exchange trades in them. Remember: Clearing obligations and maintaining individual beneficial holdings are related but distinct functions.
Hint Common mistake: Assigning the entire settlement process to the RTA because it services the shares.
VI-023Practice bank se · 4
A DP has verified a demat request and sent the certificate details for processing. Who validates the underlying issuer records and confirms the request for electronic credit?
The DP’s initial checks and system entry do not alone establish that a certificate represents a valid holding in the issuer’s records. The issuer/RTA verifies those records and confirms or rejects the request. Electronic credit follows the accepted process, not merely the client’s delivery of paper to a DP. Remember: DP scrutiny and issuer/RTA confirmation are separate controls in the conversion chain.
Hint Common mistake: Treating receipt of a DRF by the DP as completion of demat.
VI-024Practice bank se · 5
In the standard tripartite arrangement for an issuer using an external RTA to connect with a depository, which parties are involved?
The tripartite structure coordinates the issuer, its servicing RTA and the depository. It allocates responsibilities for electronic connectivity, records and securities servicing. It is not the investor’s trading contract and is not an arrangement among family members connected with a BO account. Remember: An issuer-connectivity agreement is different from a customer account-opening document.
Hint Common mistake: Assuming every agreement mentioned in depository operations is signed by the BO.
VI-025Practice bank se · 6
A DP posts its Rights and Obligations document on its website but provides no copy or required acknowledgement to a new BO. Is the website posting alone an adequate substitute?
The Rights and Obligations document informs the BO of the service relationship and must be supplied and acknowledged in the prescribed manner. A public web page can aid access, but it does not by itself prove the required account-level compliance. A tariff sheet covers charges, not the full rights-and-obligations framework. Remember: Public disclosure and customer-specific delivery are different compliance steps.
Hint Common mistake: Treating the availability of a document somewhere online as proof of receipt.
VI-026Practice bank se · 7
A DP employee enters a client instruction, and a second authorised employee checks the entry against the original instruction before release. What risk does this control most directly address?
The second-person review checks that what will be processed matches the authenticated customer instruction. This separation reduces the chance that one person can introduce and release an error or unauthorised movement without detection. It is an operational control, not protection against market or issuer-credit risk. Remember: Match each control to the error or abuse it is intended to prevent.
Hint Common mistake: Describing all risk controls as protection against trading losses.
VI-027Practice bank se · 8
A DP receives a second copy of an instruction already processed. What should be checked before any further posting?
A duplicate document does not necessarily represent a second instruction. The DP should use the instruction number and processing trail to establish whether it has already been acted upon. Sufficient balance alone is not authority for a second debit. Good records must distinguish a copy or resubmission from a genuinely new instruction. Remember: Check identity and status, not just balance, before executing an instruction.
Hint Common mistake: Treating every received copy as a fresh debit authorisation.
VI-028Practice bank se · 9
A DP is discontinuing its service. Which objective should govern handling of existing client holdings?
Discontinuance of a service provider does not make client holdings its property. The relevant closure, transfer and record-retention procedures protect continuity and the ownership trail. Clients’ balances and pending instructions must be dealt with through permitted processes rather than erased or disposed of for the DP’s convenience. Remember: Participant exit is a servicing transition, not a transfer of beneficial ownership to the participant.
Hint Common mistake: Assuming the end of a DP relationship extinguishes the customer’s holding.
VI-029Practice bank se · 10
An investor asks who determines and distributes a cash dividend entitlement using the beneficial-owner information supplied through the depository. The appropriate answer is:
The issuer’s corporate action establishes the cash benefit. Its issuer/RTA process uses the relevant holding and payment details to distribute it. Depository records support identifying eligible BOs. A DP cannot invent dividend rates, and securities-settlement margins are not a fund from which company dividends are paid. Remember: Data supply and cash-benefit distribution are different responsibilities.
Hint Common mistake: Expecting the DP to declare or finance the dividend.
VI-030