Depository Operations Certification Free Demo Test 5

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.

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.

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.

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.

Explanation:

Records of securities dematerialised and rematerialised are maintained by the Depository.

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.

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.

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.

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.

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.