Question

What is the function of a custodian in relation to settlement in NSCCL?

• A. Confirming trade execution
• B. Safeguarding share certificates
• C. Managing customer accounts
• D. Settling trades assigned by trading members

Hint:

Custodians ensure smooth settlement by handling securities delivery on behalf of trading members in NSCCL.

Answer 1

The Correct Option is D

In the context of the National Securities Clearing Corporation Limited (NSCCL), a custodian is instrumental in the trade settlement process on the exchange. The custodian's main responsibility is to:

Settle trades assigned by trading members by facilitating the delivery and receipt of securities for their clients.
They function as the intermediary responsible for the secure safekeeping of securities and manage the settlement of obligations arising from trading members. Custodians collaborate with the clearing corporation to ensure the settlement process is completed punctually and accurately.
Explanation of Alternative Roles:

(A) Confirming trade execution: This task is typically performed by trading members or brokers.
(B) Safeguarding share certificates: While custodians do safeguard securities, within the NSCCL framework, the focus is on settlement.
(C) Managing customer accounts: This function is usually carried out by brokers or depository participants.
Therefore, option (D) accurately defines the custodian's role in NSCCL settlement.