Question:
Who is primarily responsible for ensuring that securities are delivered to the correct beneficiary account?
Who is primarily responsible for ensuring that securities are delivered to the correct beneficiary account?
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Just as a commercial bank is responsible for transferring money to the correct bank account, a depository is responsible for delivering electronic shares to the correct demat account.
Updated On: Jun 22, 2026
- The depository
- The client
- The clearing member
- The stock exchange
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The Correct Option is A
Solution and Explanation
Step 1: Understanding the Depository System:
A depository acts as a bank for securities, holding shares, bonds, and debentures in dematerialized (electronic) form and maintaining a secure ledger of ownership.
Step 2: Tracking the Electronic Transfer of Shares:
During trade settlement, shares must move out of the seller's account and be credited to the buyer's account. This transaction is processed via electronic book entries.
Step 3: Allocating Primary Transfer Responsibility:
While brokers submit transfer instructions, the registry and electronic transfer of ownership must be verified. Ensuring that these securities are credited securely to the correct, unique beneficiary owner (BO) account is the core duty of the Depository (A) (such as NSDL or CDSL).
A depository acts as a bank for securities, holding shares, bonds, and debentures in dematerialized (electronic) form and maintaining a secure ledger of ownership.
Step 2: Tracking the Electronic Transfer of Shares:
During trade settlement, shares must move out of the seller's account and be credited to the buyer's account. This transaction is processed via electronic book entries.
Step 3: Allocating Primary Transfer Responsibility:
While brokers submit transfer instructions, the registry and electronic transfer of ownership must be verified. Ensuring that these securities are credited securely to the correct, unique beneficiary owner (BO) account is the core duty of the Depository (A) (such as NSDL or CDSL).
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