NISM Series-VI: Depository Operations Practice Exam

NISM Series-VI: Depository Operations Practice Exam

The NISM Series-VI: Depository Operations Certification Examination is designed to assess your knowledge and understanding of the Indian depository system and its operations. Earning this certification demonstrates your competency in handling depository-related tasks and effectively serving clients who invest in dematerialized securities.

Who Should Take This Exam?

This NISM Series-VI exam is ideal for individuals working in the securities market, particularly those involved in:

• Depository Participants (DPs): Employees handling client accounts, account opening, transactions, and other depository services.
• Stock Brokers & Investment Advisors: Professionals dealing with dematerialized securities and interacting with DPs on behalf of clients.
• Custodian Banks: Individuals managing client securities held in electronic form within the depository system.

There are no formal prerequisites for taking the exam. However, a basic understanding of the Indian securities market and depository operations would be beneficial.

Exam Details

• Number of questions: 100
• Negative Marking: 25% of the marks assigned to a question for incorrect answers
• Delivery Method: Online proctored exam
• Duration: 120 minutes (2 hours)
• Passing Score: Minimum passing score is 60% (after accounting for negative marking)
• Validity: The certification is valid for three years.

Examination Objectives

On successful completion of the examination the candidate should:

• Know the basics of the Indian securities market and the depository system, the need for depository and the key features of the depository system in India.
• Understand the institutional structure of the depository system in India and the business partners of a depository.
• Understand the regulatory framework in which the depositories and its DPs function, their eligibility criteria, registration procedure, rights and obligations etc.
• Know the various functions of the Depository and its Depository Participants (DPs) such as dematerialisation, trading and settlement, pledging and hypothecation.
• Understand how a demat account is opened, documents required to open an account and significance of Power of Attorney (POA).

Course Outline

The exam covers the following topics:

I. Introduction to the Indian Capital Market

1. Introduction
2. Capital Market
3. Regulatory Environment
4. Regulators

II. Introduction to Depository

1. Need for a Depository System
2. What is a Depository?
3. Legal Framework
4. Functions of a Depository

III. Depository and its Business Partners

1. Depository Participants
2. Clearing Corporation (CC)
3. Issuers and Registrar and Transfer Agents

IV. Functions of Depository Participant – Account Opening

1. Introduction
2. Types of Account
3. Beneficial Owner Account
4. Clearing Member Account
5. Closure of Account
6. Freezing of Accounts
7. Changes in Client Details
8. Implementation of the framework for Accreditation of Investors
9. Mapping of Unique Client Code (UCC) with demat account of the clients

V. Functions of Depository Participant – Account Operations

1. Introduction to Basic Services Demat Account (BSDA)
2. Operations of a Joint Account
3. Internet Based Depository Operations of NSDL
4. Internet Based Depository Operations of CDSL

VI. Functions of Depository Participant – Transmission and Nomination

1. Transmission of Securities
2. Nomination for Securities
3. Transmission of Securities

VII. Functions of Depository Participant – Dematerialisation

1. Introduction
2. International Securities Identification Number (ISIN)
3. Dematerialisation Process
4. Rematerialisation
5. Conversion of Mutual Fund units represented by Statement of Account (SOA) into dematerialized form through a DP / De-statementization
6. Reconversion of Mutual Fund Units into Statement of Account Form (SOA Form) / Restatementization
7. Credit of units of AIFs in dematerialised form

VIII. Functions of Depository Participant – Trading and Settlement

1. Introduction
2. Settlement of Off-Market Transactions
3. Settlement of Market Transactions
4. Interoperability
5. Procedure for Subscription and Redemption of Mutual Fund Units
6. Handling of Clients’ Securities by Trading Members/Clearing Members settlement
7. Government of India notification regarding the Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019

IX. Special Services – Pledge & Hypothecation

1. Introduction
2. Procedure for Pledge/Hypothecation
3. Recording of Non Disposal Undertaking (NDU) in the Depository System
4. Margin obligations to be given by way of Pledge/ Re-pledge in the Depository System

X. Special Services – Public Offering / Corporate Actions

1. Concept of Corporate Actions
2. Important Terms
3. Procedure for Corporate Actions
4. Public Issue

XI. Special Services – Debt Instruments & Government Securities

1. Introduction
2. Certificate of Deposit (CD)
3. Commercial Paper (CP)
4. Government Securities

XII. Foreign Portfolio Investors (FPI)

1. Introduction
2. Eligibility criteria of FPI applying for FPI Registration to a Designated Depository Participant

XIII. Investor Services

1. Introduction to Redressal of complaints through (SCORES)
2. Transfer of Shares to Demat Account of IEPF Authority
3. Annexure 1: Process of Aadhar e-KYC of Resident Investors in the Securities Markets under section 11A of the PMLA, 2002
4. Annexure 2: Use of Technology for KYC
5. Annexure 3: Operational Mechanism for Margin Pledge
6. Annexure 4: Framework for Utilization of Client’s Pledged Securities for Exposure and Margin