Skip to content
on NiftyScanner
Is the market open today? Today
SearchCtrl K
My learning
Is the market open today? Today

Find your next idea

Depositories Act 1996

3 questions. Each answer is explained.

Question 1 of 3Practice · Series III-A — Securities Intermediaries Compliance (Non-Fund)

0 right · 0 wrong · 3 to go

Series III-A15. Depositories Act 1996IntermediateConceptQuestion reference III-A-120

Question 1 of 3What does fungibility mean for equivalent securities of the same class held in dematerialised form?

A–D or 1–4 to answer · Enter or → for the next question · ← to go back

Learn these topics

More units in NISM Series III-A

Practise all of NISM Series III-A

Exam format

Questions100 · 1 mark each
Duration120 min · 2 hours
Pass mark60% · 60 of 100 marks
Negative marking25% · 0.25 marks off per wrong answer
Certificate validity3 years · from the date of the examination
Marks for this unitNot published by NISM

NISM Series III-A Securities Intermediaries Compliance (Non-Fund)

Exam rules read on NISM's site on 17 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.

Rules used across this bank
  • 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.
Extra rules for Series VII
  • 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.
Extra rules for Series I
  • 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 17 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 3 questions on Depositories Act 1996, with answers

  1. Q1For securities held through a depository, who is entitled to their ownership benefits and related liabilities?

    • Option A. The depository solely because it is registered owner

      Why it is wrong: The depository’s registered-owner status is limited and does not transfer the investor’s economic rights to it.

    • Option B. The beneficial owner — Correct answer

    • Option C. The broker solely because it executed the purchase

      Why it is wrong: Executing a purchase does not make the broker the beneficial owner.

    • Option D. The exchange solely because it listed the security

      Why it is wrong: Listing a security does not give the exchange its ownership benefits.

    Answer: B. The beneficial owner has the rights, benefits and liabilities attached to the securities under section 10. Remember: Depository records distinguish the registered-owner mechanism from beneficial ownership.

    Hint, shown before you answer in practice mode: Common mistake: Assuming the depository receives the investor’s dividends and voting rights for itself. Distinguish the investor’s economic rights from the depository’s transfer-related role.

    III-A-119easyregulatory

    Study this unit

  2. Q2What does fungibility mean for equivalent securities of the same class held in dematerialised form?

    • Option A. Units are interchangeable, not identified by certificate numbers — Correct answer

    • Option B. Each unit must retain a unique physical certificate

      Why it is wrong: Dematerialised fungible units are not tracked through individual physical certificates.

    • Option C. Units issued by different companies become identical securities

      Why it is wrong: Fungibility does not make securities of different issuers identical.

    • Option D. Every unit must trade at its original issue price

      Why it is wrong: The concept does not fix a security’s market price.

    Answer: A. Fungibility means equivalent units are interchangeable rather than tied to an individual physical certificate identity. Remember: Fungibility applies to equivalent units, not to every security in a demat account.

    Hint, shown before you answer in practice mode: Common mistake: Assuming fungibility makes shares of unrelated companies interchangeable. Keep the comparison within equivalent securities of the same class.

    III-A-120mediumconceptual

    Study this unit

  3. Q3An investor wants to create a pledge over dematerialised securities. Which route is consistent with the depository framework?

    • Option A. Hand over an unrelated company’s share certificate

      Why it is wrong: An unrelated certificate does not create a pledge over these dematerialised securities.

    • Option B. Send an informal message to another investor only

      Why it is wrong: A message to another investor does not replace the prescribed recording process.

    • Option C. Use the prescribed pledge process via the depository participant — Correct answer

    • Option D. Treat any verbal loan discussion as a completed pledge entry

      Why it is wrong: A verbal discussion alone does not complete the depository pledge entry.

    Answer: C. The investor should use the prescribed depository-participant process so the pledge is properly recorded. Remember: A dematerialised pledge needs the prescribed recorded process.

    Hint, shown before you answer in practice mode: Common mistake: Assuming possession of an account statement is enough to create a recorded pledge. Think about how the security interest is recorded in the electronic holding system.

    III-A-121mediumapplication

    Study this unit

Depositories Act 1996: common questions

How many practice questions are there on Depositories Act 1996?

3 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 23 practice topics for NISM Series III-A, which has 150 questions in total.

Are these real NISM Series III-A questions on Depositories Act 1996?

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.

Does negative marking apply to NISM Series III-A?

Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. 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.

Next unit

SEBI (Depositories and Participants) Regulations 2018

4 questions on SEBI (Depositories and Participants) Regulations 2018. Its quiz opens on that unit.

Open SEBI (Depositories and Participants) Regulations 2018

Paper Trading Try it on the practice trading desk