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Questions and Answers
Who among the following can act as a depository participant?
Who among the following can act as a depository participant?
- Insurance companies
- Mutual funds
- Real estate firms
- All of the above (correct)
Which of the following is NOT considered a depository participant?
Which of the following is NOT considered a depository participant?
- Banks
- Brokerage houses
- Trust companies (correct)
- None of the above
Which of the following entities is a valid option for a depository participant?
Which of the following entities is a valid option for a depository participant?
- Hedge funds
- Credit unions
- Wealth management companies
- All of the above (correct)
Which of the following would NOT typically provide depositor participant services?
Which of the following would NOT typically provide depositor participant services?
What can be inferred about the role of banks in the context of depository participants?
What can be inferred about the role of banks in the context of depository participants?
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Study Notes
Depository Participant (DP)
- A Depository Participant (DP) is an entity that acts as an intermediary between the Depository and the investors.
- DPs hold securities on behalf of their clients and facilitate the trading and settlement of securities.
Who can act as DP?
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Banks: Banks can act as DPs and hold securities on behalf of their clients, making it easier for investors to manage their portfolios.
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Brokerage Houses: Brokerage houses can act as DPs, giving investors access to a wide range of financial products via their trading platforms.
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Financial Institutions: Financial institutions, like mutual funds and insurance companies, can also act as DPs, managing their own securities and facilitating trades on behalf of their clients.
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All of the above is the correct answer: All of the above entities can act as depository participants under the Depository Act of 1996.
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