Question

____________ serves as an intermediary between the investor and the depository who is authorised to maintain the accounts of dematerialised shares.

• A. Depository Participant
• B. National Securities Depository Limited
• C. Central Depository Services Limited
• D. Stock Exchange

Hint:

An agent such as a bank or a broker opens the demat account for the investor and links with the depository. That agent is the Depository Participant.

Answer 1

The Correct Option is A

Step 1: Understand the demat system:
In the demat system shares are held in electronic form in an account with a depository. The account is opened through an agent who deals with the investor directly.
The question asks for the one who acts as the link between the investor and the depository.

Step 2: Why option (1) Depository Participant is correct:
A Depository Participant (DP) is an agent of the depository. It could be a bank, a broker or a financial institution.
The investor opens the demat account with a DP, and the DP passes the instructions to the depository. So the DP is the intermediary.

Step 3: Why option (2) is wrong:
National Securities Depository Limited (NSDL) is itself a depository. It is not the intermediary between the investor and the depository.

Step 4: Why option (3) is wrong:
Central Depository Services Limited (CDSL) is also a depository. It keeps the records, and it works through DPs.

Step 5: Why option (4) is wrong:
A stock exchange is a market where shares are bought and sold. It does not maintain the demat accounts of investors.

Final Answer:
The intermediary between the investor and the depository is the Depository Participant, option (1).