Depository Services
10 questions. Each answer is explained.
Question 1 of 10Practice · Series II-A — Registrars to an Issue and Share Transfer Agents - Corporate
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Learn these topics
More units in NISM Series II-A
- Introduction to Securities10
- Characteristics of Equity Shares10
- Characteristics of Debt Securities10
- Characteristics of Other Securities10
- Basics of Mutual Funds10
- SEBI – Role and Regulations10
- Public Offer of Securities10
- Modes of allotment of shares other than Public Offers10
- Processes related to Public Offering of Shares10
- Roles and Responsibilities in a Public Issue10
- Processes Related to Depositories10
- Investor Interface with the R&T Agent10
- Secondary Market Transactions10
- Client Servicing10
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 50% · 50 of 100 marks |
| Negative marking | None · a wrong answer costs nothing beyond the mark |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | 6 of 100 marks (6%) |
Source: March 2025 Annexure I, Unit 11: Depository Services
NISM Series II-A Registrars to an Issue and Share Transfer Agents - Corporate
Exam rules read on NISM's site on 31 October 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 31 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 10 questions on Depository Services, with answers
Q1What does dematerialisation of securities mean for an investor holding valid paper share certificates?
Option A. Cancelling the company’s entire share capital
Why it is wrong: Changing holding form does not cancel the company’s share capital.
Option B. Replacing equity shares with bank deposits
Why it is wrong: Dematerialisation does not turn an equity investment into a bank deposit.
Option C. Converting the holding into electronic form — Correct answer
Option D. Selling the holding automatically on the exchange
Why it is wrong: The process is not itself an exchange sale.
Answer: C. Dematerialisation converts a valid physical securities holding into electronic form without itself selling the holding. Remember: Dematerialisation changes holding form, not the investment’s basic nature.
Hint, shown before you answer in practice mode: Only the form in which the security is held is changing. Common mistake: Treating dematerialisation as a sale or redemption of the shares.
II-A-101easyconceptual
Q2Through which intermediary does an ordinary investor normally access depository account services?
Option A. A depository participant — Correct answer
Option B. An issue underwriter
Why it is wrong: An underwriter covers an agreed issue-subscription risk, not routine demat account services.
Option C. A credit rating agency
Why it is wrong: A credit rating agency assesses credit risk rather than maintaining investor accounts.
Option D. A company’s statutory auditor
Why it is wrong: A statutory auditor audits financial records and is not the investor’s depository interface.
Answer: A. An ordinary investor normally accesses depository account services through a depository participant. Remember: The depository participant is the investor-facing access point for depository services.
Hint, shown before you answer in practice mode: Think of the investor-facing intermediary within the depository system. Common mistake: Approaching an unrelated issue intermediary for a demat account request.
II-A-102easyconceptual
Q3Who is the beneficial owner of securities recorded in an investor’s demat account?
Option A. The stock exchange’s managing director
Why it is wrong: An exchange officer does not own securities in an investor’s account.
Option B. The investor entitled to those securities — Correct answer
Option C. The depository participant’s largest shareholder
Why it is wrong: The participant’s shareholder does not own client securities merely through owning the participant.
Option D. The credit rating agency covering the issuer
Why it is wrong: A rating relationship does not create ownership of investors’ securities.
Answer: B. The investor entitled to the securities is their beneficial owner, rather than the intermediary providing account services. Remember: Holding through an intermediary does not transfer the investor’s beneficial ownership to that intermediary.
Hint, shown before you answer in practice mode: Beneficial ownership refers to the person holding the investment benefits and rights. Common mistake: Assuming the service provider owns the client securities it records.
II-A-103easyconceptual
Q4Which asset is recorded as a securities holding in a demat account rather than as cash in a bank account?
Option A. A dividend credit received in the bank
Why it is wrong: A dividend received in the bank is a cash credit rather than an additional demat share holding.
Option B. Cash set aside for a subscription
Why it is wrong: Money set aside for subscription remains cash rather than allotted securities.
Option C. A balance of listed equity shares — Correct answer
Option D. A cash credit from a share sale
Why it is wrong: The cash proceeds of a sale are not themselves a demat securities quantity.
Answer: C. A balance of listed equity shares is a securities holding that can be recorded in a demat account. Remember: A bank account and a demat account record different types of assets.
Hint, shown before you answer in practice mode: Distinguish the record of securities from the record of spendable money. Common mistake: Looking for cash withdrawals in the demat securities balance.
II-A-104mediumconceptual
Q5What does an International Securities Identification Number, called an ISIN, identify in the depository system?
Option A. A broker’s registration number
Why it is wrong: A broker’s registration number identifies the intermediary, not a security.
Option B. An investor’s bank branch
Why it is wrong: A bank branch identifier does not identify the security held in demat.
Option C. A particular security — Correct answer
Option D. An investor’s tax identifier
Why it is wrong: An investor’s tax identifier serves a different purpose from an ISIN.
Answer: C. An ISIN identifies a particular security rather than the investor or bank account holding it. Remember: Security identifiers and investor account identifiers are not interchangeable.
Hint, shown before you answer in practice mode: The same security can be held by many investors with different account numbers. Common mistake: Using an investor account number where a security identifier is needed.
II-A-105mediumconceptual
Q6An investor changes residence and holds shares only in demat form. Which routine record should be updated through the investor’s account-service channel?
Option A. The address recorded with the depository participant — Correct answer
Option B. The issuer’s authorised share capital
Why it is wrong: A personal address change does not change the company’s authorised capital.
Option C. The exchange’s security identification number
Why it is wrong: The security’s identifier does not change because one investor moves.
Option D. The bond rating assigned to the company
Why it is wrong: An investor’s residence does not determine the company’s credit rating.
Answer: A. The investor should update the address recorded with the depository participant through the applicable account-service process. Remember: Keep demat account details current through the appropriate participant process.
Hint, shown before you answer in practice mode: The investor’s own account details are different from issuer and security-level data. Common mistake: Assuming an address change elsewhere automatically updates every investment record.
II-A-106mediumapplication
Q7Why can equivalent dematerialised shares under the same ISIN normally be treated as interchangeable?
Option A. Each investor receives a different voting class automatically
Why it is wrong: Opening separate investor accounts does not automatically create different voting classes.
Option B. Every share has a separately negotiated coupon
Why it is wrong: Ordinary equity shares do not acquire individual coupons through dematerialisation.
Option C. They are fungible holdings of the same security — Correct answer
Option D. Each demat account creates a new security issue
Why it is wrong: An account opening does not itself create a new issue of shares.
Answer: C. Equivalent shares under the same ISIN are fungible, meaning one unit of that security can substitute for another equivalent unit. Remember: Fungibility concerns equivalent units of the same security, not different securities.
Hint, shown before you answer in practice mode: Consider whether identical electronic units depend on the old paper-certificate identity. Common mistake: Assuming old physical certificate identities remain the basis of every electronic transfer.
II-A-107mediumconceptual
Q8An issuer appoints an RTA for shareholder records. A depository participant also services investors’ demat accounts. Which distinction is correct?
Option A. RTA and participant are interchangeable names for the same legal function
Why it is wrong: The two roles are distinct even when organisations provide connected services.
Option B. The participant maintains issuer registers while the RTA services every demat account
Why it is wrong: This reverses the ordinary issuer-side and investor-account roles.
Option C. Only an issuer’s RTA can open and service that issuer’s investors’ demat accounts
Why it is wrong: Depository participants provide investor demat accounts rather than an issuer’s RTA having an exclusive account-opening role.
Option D. The RTA supports issuer records while the participant services investor accounts — Correct answer
Answer: D. The RTA supports issuer-side records and corporate-action work, while the participant provides investor-facing depository account services. Remember: Issuer record-keeping and investor demat servicing are connected but distinct roles.
Hint, shown before you answer in practice mode: Identify which party works with the issuer’s register and which is the investor’s account interface. Common mistake: Assuming the RTA and depository participant are the same function.
II-A-108mediumapplication
Q9A depository is recorded as registered owner for facilitating transfers. The investor remains the beneficial owner. Who ordinarily has the investment’s voting and economic rights?
Option A. The issuer’s registrar for its own benefit
Why it is wrong: The registrar records entitlements but does not receive them for itself.
Option B. The beneficial owner, subject to the security’s rights — Correct answer
Option C. The depository solely because it is registered owner
Why it is wrong: The depository’s transfer-facilitation role does not make it the beneficial investor.
Option D. The participant’s employees in their personal capacity
Why it is wrong: Employees of the participant do not acquire personal rights over client holdings.
Answer: B. The beneficial owner ordinarily has the voting and economic rights attached to the security, while the depository’s registered-owner role facilitates the holding and transfer system. Remember: Distinguish the depository’s registered-owner role from the investor’s beneficial rights.
Hint, shown before you answer in practice mode: Registered ownership for the depository mechanism is not the same as beneficial ownership. Common mistake: Assigning investment benefits to the name used for depository transfer mechanics.
II-A-109hardapplication
Q10An investor updates bank details in one demat account but holds the same company’s shares in a second account with old details. What should be checked before the next payout?
Option A. Whether all holdings should be treated as belonging to the participant
Why it is wrong: Using participant ownership would wrongly replace the beneficial owner’s rights.
Option B. Whether both relevant account records contain the intended bank details — Correct answer
Option C. Whether the issuer must use whichever account paid the most brokerage
Why it is wrong: Brokerage paid does not determine the registered payout instruction.
Option D. Whether changing one account automatically changes all other accounts
Why it is wrong: Automatic propagation across all independent accounts should not be assumed.
Answer: B. The investor should check both account records because updating one account should not be assumed to update another independent account automatically. Remember: Confirm that changes cover every relevant account rather than assuming a universal update.
Hint, shown before you answer in practice mode: Separate accounts can have separate service records even for the same investor and security. Common mistake: Updating one investment account and assuming all other records are synchronised.
II-A-110hardapplication
Depository Services: common questions
How many practice questions are there on Depository Services?
10 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 15 practice topics for NISM Series II-A, which has 150 questions in total.
Are these real NISM Series II-A questions on Depository Services?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
How much of the NISM Series II-A exam is Depository Services?
NISM's published syllabus outline gives it 6 of the paper's 100 marks, or 6% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: March 2025 Annexure I, Unit 11: Depository Services
Does negative marking apply to NISM Series II-A?
No. NISM applies no negative marking to Series II-A. A wrong answer costs nothing beyond the mark you did not earn, so a blank is never better than an attempt. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Processes Related to Depositories
10 questions on Processes Related to Depositories. Its quiz opens on that unit.
Open Processes Related to DepositoriesPaper Trading Try it on the practice trading desk