NISM Series VI (Depository Operations) flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

Depository

An entity that holds securities in dematerialised form and provides services through Depository Participants; India has NSDL and CDSL, both regulated by SEBI under the Depositories Act, 1996.

Depository Participant (DP)

A SEBI-registered intermediary that acts as the agent of the depository and provides demat services to investors, including account opening, dematerialisation, and transfer instructions.

Dematerialisation

The process of converting physical share certificates into electronic form by submitting a DRF to the DP, who forwards it to the RTA; certificates are destroyed and securities credited to the demat account.

Rematerialisation

The process of converting electronic holdings back into physical certificates by submitting an RRF to the DP; the RTA prints and dispatches certificates and the demat account is debited.

ISIN

International Securities Identification Number, a 12-character unique code identifying each security issue; demat holdings are tracked by ISIN rather than certificate numbers.

Delivery Instruction Slip

A signed instruction from the account holder to the DP specifying ISIN, quantity, target account, and execution date for transferring securities; can be physical or electronic (e-DIS).

Transmission

Transfer of securities by operation of law, such as on death or insolvency, requiring documents like death certificate, affidavit, indemnity bond, and KYC of the claimant.

Pledge

A facility to create a charge on demat securities in favour of a pledgee by submitting a pledge creation form signed by both parties; the pledgee can invoke it on default.

Nomination

An optional facility allowing a demat account holder to name one or more nominees to receive securities on death; it does not override a valid will.

Beneficial Owner

The investor who holds securities in demat form and enjoys all rights of ownership, including dividends, bonus, and voting, even though the depository is the registered holder.

Clearing Member Pool Account

An account maintained by a clearing member with a DP to facilitate pay-in and pay-out of securities during settlement of trades on the exchange.

ASBA

Application Supported by Blocked Amount, a facility for public issue applications where the investor's bank account is blocked until allotment; securities are credited to the demat account on allotment.

T+1 Settlement

A rolling settlement cycle where trades are settled on the next working day after the trade date; pay-in and pay-out occur on T+1.

Short Delivery

A situation where the seller fails to deliver securities on pay-in; the exchange conducts an auction and the defaulting seller bears the price difference.

Basic Service Demat Account

A low-cost demat account for small investors with no annual maintenance charge up to a specified holding value, introduced by SEBI to widen retail participation.

In-Person Verification

A KYC requirement where the DP physically verifies the identity of the applicant during account opening, ensuring the person exists and documents are genuine.

KYC

Know Your Customer norms requiring PAN, address proof, photograph, and identity verification for demat account opening, with periodic updation based on risk category.

PMLA

Prevention of Money Laundering Act, under which DPs are reporting entities required to conduct customer due diligence, monitor transactions, and file suspicious transaction reports.

SEBI SCORES

SEBI's online complaint redressal system where investors can file grievances against DPs and track resolution; escalation after DP and depository grievance cells.

Depository Ombudsman

A SEBI-mandated dispute resolution mechanism for depository-related complaints; investors can file online and the award is binding on the DP if accepted.

Investor Charter

A SEBI-mandated document published by DPs listing services, timelines, and grievance escalation paths; it must be displayed on the DP website and given to clients.

Freezing of Account

A facility where a demat account is frozen on investor request or regulatory order, preventing debit of securities; it can be partial (specific ISINs) or full.

Lien

A restriction placed on demat securities, typically on client instruction or a court order, preventing debit until the lien is released.

Off-Market Transfer

Transfer of securities between two demat accounts without an exchange trade, executed via a DIS with off-market instruction and applicable stamp duty.

e-DIS

Electronic Delivery Instruction Slip, an online instruction to the DP for transferring securities, authenticated with OTP and registered mobile or email.

Rights Issue

An offer of new shares to existing shareholders; the entitlement is credited to the demat account and the investor must apply via ASBA or the RTA within the offer window.

Bonus Issue

Free additional shares issued to existing shareholders in proportion to holdings; credited automatically to the demat account without any application by the investor.

Stock Split

A corporate action that increases the number of shares and reduces face value; the demat holding is adjusted automatically and the ISIN may change.

Record Date

The date fixed by the company or RTA to determine which shareholders are entitled to a corporate action; holdings must be in demat form on that date.

IEPF

Investor Education and Protection Fund, to which unclaimed dividends and matured deposits are transferred after seven years; investors can claim refunds from the fund.

Interoperability

A SEBI-mandated facility allowing investors to transfer securities between NSDL and CDSL accounts, supported by DPs since 2021.

Net Worth Requirement

The minimum capital a DP must maintain, prescribed by SEBI, to ensure financial soundness; a shortfall must be reported to SEBI and the depository.

Code of Conduct

A set of ethical and operational standards prescribed by SEBI for DPs, covering honesty, confidentiality, avoidance of conflicts, and prompt execution of client instructions.