NISM Series - VI Depository Operations Cert. Mock Test - 1/50 NISM Series – VI Depository Operations Cert. Mock Test – 1 1 / 50Is it true or false that locked-in securities can be invoked before the lock-in release date? a) True b) False Explanation:Locked-in securities cannot be invoked before the lock-in release date.2 / 50For registering as a Depository Participant, the application should be submitted to whom? a) Directly to SEBI and a copy should be sent to Depository for information only b) To Depository, who will in turn forward it to SEBI after evaluation c) Separately to Depository and SEBI d) To Depository who will in evaluate and register the DP Explanation:An entity desirous of becoming a DP of a depository should make an application to SEBI through the Depository. The application complete in all respects should be submitted to the depository in which membership is sought for.The depository evaluates the application and if it finds that the applicant has the potential to be admitted as a DP, then it forwards that application to SEBI within 30 days from the date of receipt of the application. Along with the application, the depository also submits its recommendations regarding the applicant.3 / 50In the context of a Rights Issue, the new securities are allocated during ________. a) Physical form b) The form in which the shareholder held the security as on the record date c) Dematerialised Form d) None of the above Explanation:The Issuer / its R&T Agent, on the basis of details of holdings received from the depository, dispatch the application form for rights issue to the beneficial owners. The form requires the applicant to state his option about whether he would like to receive the new securities in physical form or dematerialised from.In case, the applicant does not exercise his option, new securities are allotted in the form in which the shareholder held the security as on the record date.4 / 50Is it true or false that an investor in Government Securities needs to open a separate demat account for it? a) False b) True Explanation:An investor in government securities has the option to have securities issued either in physical form or in book entry form (commonly known as SGL form).The depositories in India have been given permission to maintain SGL accounts, of investors through its DPs. Any client account opened with a DP may be used for dealing in government securities. Thus, equity shares, mutual fund units and G-Secs can be dealt with through a single account.5 / 50What needs to be filled in while submitting the Delivery Instruction Slip if an investor wishes to participate in the tender offer? a) Event Number (i.e., Settlement Number) b) Execution Date c) Tender Offer Type (i.e. Market Type) d) All of the above Explanation:The investors who wish to participate in the tender offers viz., buyback, takeover and delisting offer of company will be required to mention the details as per the existing process (as given below) while submitting delivery instructions slip (DIS) or electronic instructions to the Participants.– Execution Date – Tender Offer Type (i.e. Market Type) – Event Number (i.e., Settlement Number) – CM BP ID – ISIN – Quantity6 / 50Describe Pay-Out. a) Its the process of a CC transferring the securities to the broker’s margin account for the quantity of securities purchased by them on behalf of their clients b) Its the process of a CC transferring the securities to the broker’s margin account for the quantity of securities sold by them on behalf of their clients c) Its the process of a CC transferring the securities to the broker’s settlement account for the quantity of securities purchased by them on behalf of their clients d) Its the process of a CC transferring the securities to the broker’s settlement account for the quantity of securities sold by them on behalf of their clients Explanation:The process of a CC (Clearing Corporation) transferring the securities to the broker’s CM-account (Clearing Member Account or Settlement Account) for the quantity of securities purchased by them on behalf of their clients is known as ‘pay-out’.The process of a broker/trading member submitting securities sold by him on behalf of his client, to CC of a stock exchange is called ‘pay-in’.7 / 50How often is the transaction statement sent to the Beneficiary Address for a Basic Services Demat Account (BSDA) that has remained without any transaction and a nil balance for one year or more? a) Annually b) Quarterly c) Monthly d) No transaction statement need to be sent Explanation:Transaction statements:a. Transaction statements shall be sent to the BO at the end of each quarter. If there are no transactions in any quarter, no transaction statement may be sent for that quarter.b. If there are no transactions and no security balance in an account, then no further transaction statement needs to be provided.8 / 50Which Act includes regulations related to the dematerialization of securities? a) Securities Contract Regulation Act (SCRA) – 1956 b) Depositories Act – 1996 c) SEBI Act – 1992 d) Companies Act – 1956 Explanation:The Depositories Act, 1996 provides for the establishment of depositories in securities market with the objective of ensuring free transferability of securities with speed, accuracy and security by (a) making securities freely transferable subject to certain exceptions; (b) dematerialisation of the securities in the depository mode; and (c) providing for maintenance of ownership records in a book entry form.9 / 50For an Off Market trade, if the debit is to be executed on a specific future date, the account holder may indicate such date in the space provided for ‘_________’ in the form. a) Debit Date b) Execution Date c) Transfer Date d) Value Date Explanation:The ‘Delivery Instruction’ for an off-market trade or for a market trade has to be clearly indicated in the form by marking appropriately. The form should be complete in all respects.All the holder(s) of the account have to sign the form. If the debit has to be effected on a particular date in future, account holder may mention such date in the space provided for ‘execution date’ in the form.10 / 50Who regulates the sale and purchase of gold related securities? a) Depositories – NSDL and CDSL b) Securities and Exchange Board of India – SEBI c) Reserve Bank of India – RBI d) Insurance Regulatory and Development Authority of India – IRDAI Explanation:The powers in respect of the contracts for sale and purchase of securities, gold related securities, money market securities and securities derived from these securities and ready forward contracts in debt securities are exercised concurrently by RBI.11 / 50In a securities pledge transaction, who initiates the initiation of the pledge? a) Pledgor b) Pledgee Explanation:The pledgor (borrower of funds) initiates the creation of pledge/hypothecation through its DP and the pledgee instructs its DP to confirm the creation of the pledge.12 / 50For which aspects can a depository conduct entrance examinations and/or interviews to assess the knowledge of the DP and its staff? a) Functional aspect of the depository b) Technical aspect of the depository c) Operational aspect of the depository d) Operational, functional and technical aspect of the depository Explanation:The depository may conduct entrance examinations and/or interviews, to examine the knowledge of the DP (and its staff) related to the operational, functional and technical aspects of the depository.13 / 50Is it true or false that securities in dematerialized form are not identified by distinctive numbers and certificate numbers? a) False b) True Explanation:In the depository system, the securities in dematerialised form are not identified by distinctive numbers and certificate numbers as in the physical environment. Thus all securities in the same class are identical with each other and are interchangeable.14 / 50On the issue of secured debentures, the Issuer initially allots ___________ until the charges are created. a) Letter of Allotment (LOA) b) Letter of Appointment (LOA) c) Certificate of Debt d) None of the above Explanation:On issue of secured debentures, the Issuer initially allots Letter of Allotment (LOA) till the charges are created. On creation of the charge, debenture certificates are issued in lieu of the LOA.15 / 50Is it true that typographical errors are allowed at the Depository Participant end, subject to the maintenance of prescribed documents? a) No b) Yes Explanation:CDSL allows change in name due to typographical errors at DP end subject to maintenance of prescribed documents.16 / 50Do depositories provide a service to facilitate the transfer of securities from one account in one depository to another depository at the instruction of the account holder? a) False b) True Explanation:One of the most important and basic services provided by the depositories in India is to facilitate transfer of securities from one account to another at the instruction of the account holder. In the depository system both transferor and transferee have to give instructions to its DPs for delivering (transferring out) and receiving of securities.Securities can be easily transferred from one depository to another by filling up the Delivery Instruction Slips (DIS).17 / 50Government securities mean securities created and issued by the _________ for the purpose of raising a public loan. a) State Government b) Central Government c) Both of the above d) None of the above Explanation:Government securities means a securities created and issued by the Central Government or a State Government for the purpose of raising a public loan.18 / 50Is it true or false that for corporate accounts with National Securities Depository Limited (NSDL), the PAN card of authorized signatories is ‘verified with original’ and taken on record? a) True b) False Explanation:All corporate investors have to submit documents as prescribed by SEBI along-with the stipulated KYC Application Form (Part I) and Account Opening Form (Part II) as per the format.An authorised official of the DP shall verify the copies of the proof of address / identity documents with the original documents and write or put a stamp with the words: “verified with original” and affix his/her signature on the documents submitted by the Client, while exercising such due diligence.19 / 50When the depository system was established in India, it led to _________ . a) Reduced risk b) Increased transparency c) Improved investor protection d) All of the above Explanation:The Depositories Act, 1996, ushered in an era of efficient capital market infrastructure, improved investor protection, reduced risks and increased transparency of transactions in the securities market.20 / 50Is it true or false that when an instruction is given to move security from one settlement to another settlement, this is known as Inter-Settlement transfer? a) True b) False Explanation:Inter-Settlement Transfers : In a clearing member account, the securities are always kept in a bucket of specific market type and settlement number. The clearing member may have to move securities from one bucket with a different market type-settlement number combination to another bucket from where pay-in is to be effected.To effect this movement a clearing member can give an instruction to move securities from one settlement to another settlement which is called ‘inter-settlement’ transfer.21 / 50In an IPO allocation, once the allotment is made, _______ sends the intimation of allotment to the investors. a) Issuer b) RBI c) Stock Exchanges d) SEBI Explanation:On IPO allotment, the Issuer / its R&T agent provides the details of successful allottees who have opted for receiving securities in demat form, to the depository.The depository will credit the securities to the allottee accounts on the execution date and the Issuer / its R&T agent inform the investors of the credit of securities in the electronic form by sending the allotment advice.22 / 50The transferee has to submit duly filled in ‘Receipt-instruction’(RI) form for every expected receipt if __________ . a) Standing Instruction is not given b) One of the party to the transaction is FII c) It is a ‘off-market’ transaction d) A FII is transferor Explanation:Transferee however, can give ‘Standing Instructions’ [SI] to its DP for securities to be received. If SI is not given, the transferee has to give separate receipt instructions each time securities have to be received.23 / 50Under what circumstances can a DP initiate the closure of a client’s account? a) The client has defaulted in performing its obligations b) The client has not operated the account for more than two years c) The client has traded for more than 1000 different companies shares d) The client has not operated the account for more than a year Explanation:The Depository Participant may also initiate closure of a client’s account if the client has defaulted in performing its obligations laid out in the Rights and Obligations document.The DP should give sufficient notice to the client before initiating closure of his account.24 / 50The issuer and which other party enter into a tripartite agreement with the Registrar & Transfer Agent? a) Clearing Corporation b) Depository Participant c) Stock Exchange d) Depository Explanation:Admission of Debt Instrument to the Depository System –An Issuer may offer demat facility for its debt instruments by sending a request to the depositories detailing the type of instrument, along with a Letter of Intent. On receipt of the request, a tripartite agreement is signed between the depository, the Issuer and Registrar & Transfer Agent. Once admitted, these securities are made available for dematerialisation by the depository.25 / 50Is it true or false that when a rematerialization request is submitted, the securities in the client account become immediately available for delivery or transfer? a) True b) False Explanation:When a rematerialisation request is sent, the securities in the client account will not be available for delivery/transfer immediately. The client will have to wait for physical certificates to reach him before they can be sold.Thus the client would encounter temporary illiquidity on the securities requested for in rematerialised form.26 / 50Are the rules for reconciling Destat requests and maintaining records the same for mutual funds as those applicable for the dematerialization of securities? (True/False) a) True b) False Explanation:The rules regarding reconciliation of Destat (Destatementisation) requests and maintenance records will be same as applicable for dematerialisation of securities.27 / 50What section does the Depository Participant (DP) complete in the request form for the transfer of Government securities from the SGL account to the Depository account? a) Forwarding Section b) Consent Section c) Authorisation Section d) Approval Section Explanation:The DP fills the “Authorisation Section” of the request form for transferring Government securities from an SGL (Subsidiary General Ledger) account to a Depository account. This section typically requires the DP to provide authorization for the transfer, confirming that the request is valid and has been processed correctly according to the relevant regulations and procedures.28 / 50Which entity now requires the mandatory submission of PAN for the opening of a demat account? a) Finance Ministry b) SEBI c) Income Tax Act d) RBI Explanation:SEBI has made the requirement of PAN as a mandatory requirement for demat account opening.It was decided that the Depositories will issue directions to DPs making Permanent Account Number (PAN) compulsory for all categories of demat account-holders including minor, trust, foreign corporate body, banks, corporates, FIIs and NRIs.29 / 50Who declines the Demat Request Form (DRF), and who communicates this to the client? a) Registrar and Transfer Agent ; Depository b) Depository ; Depository Participant c) Registrar and Transfer Agent ; Depository Participant d) Depository Participant ; Stock Broker Explanation:R&T Agent will reject the demat request if its incomplete / wrong and forward the rejected documents to the DP. DP has to contact the client and inform the client accordingly.30 / 50What is the nominal value of a Commercial Paper within the depository system? a) Rs 5000 b) Rs. 50,000 c) Rs 5,00,000 d) Rs 50,00,000 Explanation:Commercial Paper (CP) : An investor can subscribe to minimum of Rs. 5,00,000 or multiples thereof, as the face value of a Commercial Paper in the depository system is taken as Rs. 5,00,000.31 / 50A Depository Participant may terminate/stop its operation by giving a ___ days notice to the Depository. a) 60 b) 90 c) 30 d) 45 Explanation:A Depository Participant may terminate its participation in the depository by giving a notice of not less than 30 days.On receipt of such notice, the depository may cease to provide any service or act for the DP. The depository should notify the DP, other participants, clients of the surrendering DP and SEBI within seven days of this action.32 / 50Is it necessary to verify the client’s signature on the DRF-GS (Demat Request Form for Government Securities) with the signature on the account opening form when applying to transfer Government Securities (G-Secs) from SGL form to a Depository account? a) True b) False Explanation:When applying to transfer Government Securities (G-Secs) from SGL form to a Depository account using the DRF-GS (Demat Request Form for Government Securities), it is essential to verify the client’s signature on the DRF-GS with the signature on the account opening form. This verification ensures the authenticity and security of the transfer process.33 / 50Under what circumstances can a Registrar and Transfer Agent reject a Demat Requisition Form (DRF)? a) The securities to be Dematted are not attached with DRF b) The ISIN number of the security is wrongly mentioned c) The signatures in their records do not match with that on DRF d) All of the above. Explanation:A Demat Requisition Form (DRF) may be rejected by a Registrar and Transfer Agent for various reasons:Signature Mismatch: If the signatures on the DRF don’t match with the records.Missing Securities: If the securities meant for dematerialization are not attached with the DRF.Incorrect ISIN: If there is an error in mentioning the ISIN (International Securities Identification Number) of the security.“All of the above” accurately encompasses these potential reasons for rejection.34 / 50The Depository Participant has to reconcile its records with the Depository on a _________ basis. a) Daily b) Every 12 hours c) Weekly d) Every Wednesday and Saturday Explanation:The Depository Participant has to reconcile its records with its depository on a daily basis.The depository system has been formulated to do this reconciliation automatically every day at the end of the day.35 / 50Dated securities have a maturity period of ___________ . a) Between six months to one year b) Less than one year c) More than one year d) Usually more than 5 years Explanation:Dated Securities have a maturity period of more than one year. Treasury Bills have a maturity period of up to one year.36 / 50Which of the following is considered a Cash Corporate Action? a) Bonus b) Rights c) Dividend d) All of the above Explanation:Cash corporate actions involve distribution of monetary benefits, e.g., dividend and interest etc.Non-cash corporate actions involve distribution of benefits other than cash such as bonus issues, offer of shares on right basis, conversion of securities, etc.37 / 50Who has the authority to cancel the registration of a Depository Participant ? a) SEBI b) The Stock Exchange c) NSDL or CDSL d) Finance Ministry under the instructions of RBI. Explanation:The certificate of registration granted to a DP may be cancelled by SEBI if it is found that:• It is guilty of fraud, or has been convicted of an offence involving moral turpitude or • It has been guilty of repeated defaults specified for suspension of the registration.38 / 50Is it true or false that a Voters ID cannot be accepted as an ID proof for opening a Demat account? a) True b) False Explanation:The foll ID proofs are accepted for Opening a Demat Account : Passport, Voter ID Card, Driving license, PAN card with photograph.Also Identity card/document with applicant’s Photo, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges affiliated to Universities, g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and h) Credit cards/Debit cards issued by Banks are accepted.39 / 50The Demat a/c nos. in India are always of ___ digits. a) 8 b) 12 c) 16 d) 20 Explanation:A Demat a/c has 16 digits. In CDSL the first 8 digits indicate the Depositiory Participant and the next 8 digits is the client’s ID.On NSDL also we have the same system, but the DP ID begins with letters ‘IN’40 / 50If there is no activity in the demat account, the transaction statement should be provided at least once in ________ and should be sent directly to the client’s address. a) A year b) Six months c) A quarter d) A month Explanation:One annual physical statement of holding shall be sent to the stated address of the beneficial owner in respect of accounts with no transaction and nil balance even after the account has remained in such a state for one year.41 / 50Moving securities from an account in one depository to an account in another depository is referred to as ________. a) inter-depository transfer b) off-market transfer Explanation:Transfer of securities from an account in one depository to an account in another depository is termed as an inter-depository transfer.Transfer due to a transaction done on a person to person basis is called off-market transaction.42 / 50Determine if the following statement is true or false: “In pledging and hypothecation of securities, the pledgee and the pledgor can maintain their accounts with different DPs under the same depository.” a) True b) False Explanation:The creation of pledge and hypothecation against securities which are held in demat mode is permitted under the Depositories Act. Securities held in a depository account can be pledged or hypothecated against a loan, credit, or such other facility availed by the beneficial owner of such securities.For this purpose, both the parties to the agreement, i.e., the pledgor and the pledgee must have a beneficial account with the same depository as inter-depository pledge is presently not permitted. However, both parties need not have their depository account with the same DP.43 / 50When SEBI issues a certificate of commencement to a depository, it assesses the automated data processing system against which of the following? a) Unauthorized access to records and data b) Alteration of records and data c) Unauthorized dissemination of data d) All of the above Explanation:A depository that has obtained registration can function only if it obtains a certificate of commencement of business from SEBI. SEBI grants a certificate of commencement of business if it is satisfied that the depository has adequate systems and safeguards to prevent manipulation of records and transactions.Automatic data processing systems of the depository have been protected against unauthorised access, alteration, destruction, disclosure or dissemination of records and data.44 / 50A Depository Participant (DP) must be registered with __________ a) Depository b) SEBI c) Exchange d) RBI Explanation:A Depository Participant (DP) is described as an agent of the depository. They are the intermediaries between the depository and the investors. The relationship between the DPs and the depository is governed by an agreement made between the two under the Depositories Act,1996, SEBI [Depositories and Participants] Regulations, 2018 and the Bye laws of the Depository.In a strictly legal sense, a DP is an entity who is registered as such with SEBI under the provisions of the SEBI Act.45 / 50Records of dematerialized and rematerialized securities must be maintained by ________. a) Depository Participant b) All India Investors Association c) Depository d) The issuing company Explanation:Records of securities dematerialised and rematerialised are maintained by the Depository.46 / 50In the event of a default in payment by the pledgor in the scenario of a pledge of securities, the pledgee sends an invocation notice to the pledgor – True or False? a) True b) False Explanation:If the pledgor (borrower) fails to discharge his obligations under the agreement of pledge or for any other reason, the pledgee (lender) may invoke the pledge. He can then claim the beneficial ownership of the concerned securities after taking the necessary steps in terms of the pledge agreement, Bye-Laws of the depository and SEBI regulations.In such a case, the pledgee fills up the Invocation Request Form (IRF) to his Depository Participant for invoking the pledge. After due process, the securities are transferred from the ‘pledged balance’ of the pledgor’s beneficial owner account to the ‘free balance’ of pledgee’s beneficial owner account.47 / 50On what criteria do stock exchanges divide into various market segments for trading? a) On the basis of type of trade b) On the basis of type of settlement c) Both 1 and 2 d) None of the above Explanation:Stock exchanges offer different market segments in which trades can be done. The segmentation is done by the type of settlement or type of trade. Each of the segments is denoted as ‘market type’ in the depository system.48 / 50Point out which of these are considered Corporate Actions? a) Payment of call money b) Bonus Shares c) Payment of interest d) All of the above Explanation:Corporate actions are events, which affect the rights, obligations and/or interests of the beneficial owners of the securities held in a depository. The most common examples are payment of interest, dividend, bonus shares, rights, splits, merger, redemption, payment of call money, liquidation etc.49 / 50The FII-DP agreement grants the DP the authority to ___________. a) To enter into service provided by the other DPs b) Act on behalf of the FII for availing depository c) Trade on its behalf only in Nifty shares d) All of the above Explanation:The FII-DP agreement authorizes the DP to act on behalf of the FII for availing depository services and it should have been filed with SEBI.50 / 50The DP system will generate an ‘Instruction ID’ for each instruction entered for an OFF-MARKET transaction. True or False? a) False b) True Explanation:For an Off-Market trade, the DP will enter the instruction in the DP system if the instruction form is complete in all respects and is found to be in order. DP system will generate an ‘instruction ID’ for each instruction entered. DP will write the instruction ID on the instruction slip for future reference.Your score is 0% Restart quiz Exit
