NISM Series VI (Depository Operations) key terms

An entity registered with the regulator that holds securities in electronic form on behalf of investors and settles trades by transferring book entries between accounts, rather than moving physical certificates.

A registered intermediary that acts as the depository's agent, opening and maintaining investor accounts, accepting instruction slips, and passing client instructions to the depository for execution.

The process by which physical share certificates are surrendered to the issuer's registrar and replaced by an equivalent number of electronic holdings credited to the investor's account.

The reverse of dematerialisation: an investor requests that electronic holdings be converted back into physical certificates, which the registrar prints and dispatches after debiting the account.

The account a DP opens for an individual or corporate investor to hold securities in electronic form; the investor is the beneficial owner while the depository holds legal title in street name.

The person entitled to the rights and benefits of securities held electronically, such as dividends and voting, even though legal ownership of the securities rests with the depository.

A common shorthand for a client beneficiary account, the electronic equivalent of a share portfolio that records holdings, pledges, locks, and free balances maintained by the depository.

An event initiated by an issuer that affects the securities of all holders, such as a bonus issue, stock split, rights issue, dividend, merger, or redemption, requiring the depository to adjust balances.

A charge created in favour of a lender over securities held in a demat account, which are blocked until the borrower repays; the lender can invoke the pledge on default.

The lender's formal act of claiming pledged securities after default, which moves the blocked quantity from the borrower's account to the lender's account through the depository.

A restriction that prevents securities from being transferred or sold for a stated period, typically imposed on promoter holdings, preferential allotments, or shares issued under employee schemes.

The quantity of securities in a demat account that is available for transfer, sale, or pledge because it is not blocked by a lock-in, pledge, or pending instruction.

A written or electronic instruction signed by the account holder directing the DP to debit specified securities from the account and credit them to a named recipient account.

A transfer of securities between demat accounts that is not matched through a stock exchange trade, executed on the basis of a delivery instruction slip and subject to applicable stamp duty.

A transfer executed through the clearing corporation of a stock exchange, where the seller's pay-in is matched against the buyer's delivery and the depository effects settlement on the exchange's instruction.

The exchange-affiliated entity that guarantees settlement, nets trades of members, and instructs the depository to debit and credit the securities accounts of clearing members.

A trading member, or a separate entity sponsored by one, that settles trades with the clearing corporation and holds a pool account through which client securities pass at settlement.

An account maintained by a stock broker or clearing member to receive securities from selling clients and deliver them to buying clients, or to hold securities pending settlement.

An issuer-appointed agent that maintains the register of members, processes dematerialisation and rematerialisation requests, and distributes corporate action benefits to depositories and holders.

The process of transferring securities held in a deceased holder's demat account to legal heirs or nominees, requiring documents such as a death certificate, succession certificate, or probate.

A facility allowing an account holder to name a person who will receive the securities on the holder's death, reducing documentation and delay at the time of transmission.

The identity and address verification process a DP must complete before opening an account, including documents, photographs, signatures, and checks against regulatory and sanctions lists.

A mandatory step in which DP staff personally verify the identity of the person opening the account, either face to face or through a permitted video-based process, with records retained.

A code assigned to each client that links trading and demat activity to one identity, enabling exchanges and depositories to monitor exposures and detect benami or unauthorised accounts.

A written authorisation enabling a broker or DP to operate a client's demat account for specified purposes, such as executing delivery instructions after trades, within defined limits.

A low-cost account category for small investors, offering exemption from annual maintenance charges when the value of holdings stays below the threshold set by the regulator.

The recurring fee a DP charges for maintaining a demat account, usually collected in advance for the year and subject to regulatory caps for basic service accounts.

A freeze imposed by the DP or depository on an account, often after a client request or a regulatory directive, during which debits are stopped but credits may be allowed.

A status blocking specified transactions on an account or on a quantity of securities, commonly used to secure holdings after a dispute or to honour a client's safety request.

The completion of a trade by transferring securities to the buyer's account and funds to the seller, carried out on a defined cycle through the clearing corporation and depository.

A settlement cycle in which trades are settled on the next working day after the trade date, requiring sellers to deliver securities and buyers to pay funds within that timeline.

The stage of settlement at which selling members deliver securities to the clearing corporation and buying members deliver funds, before the offsetting pay-out is made.

The stage of settlement at which the clearing corporation releases securities to buying members and funds to selling members, after which brokers credit their clients' accounts.

A failure by a selling member to deliver the full quantity of securities due at pay-in, which the clearing corporation closes out or auctions to protect the buying member.

The mechanism by which a clearing corporation buys in the market the securities a defaulting seller failed to deliver, recovering the cost and penalties from that member.

A unique twelve-character code assigned to each security issue, used by depositories and exchanges to identify the instrument unambiguously across settlement systems.

The periodic matching of a DP's internal records of client holdings against the depository's records to detect and correct errors, omissions, or unauthorised debits.

The formal complaint-handling process a DP must operate, escalating unresolved investor complaints to the depository and then to the regulator's online complaint platform.