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 NSCCL (National Securities Clearing Corporation Limited), a custodian plays a critical role in the settlement process of trades executed on the exchange. The custodian’s primary function is to:

Settle trades assigned by trading members by ensuring delivery and receipt of securities on behalf of their clients.
They act as the intermediary responsible for the safe custody of securities and handle the settlement of obligations generated by trading members. Custodians coordinate with the clearing corporation to ensure timely and accurate completion of the settlement process.
Explanation of Other Options:

(A) Confirming trade execution: This is usually done by the trading members or brokers.
(B) Safeguarding share certificates: While custodians do safeguard securities, in the NSCCL context, the emphasis is on settlement.
(C) Managing customer accounts: This is typically the role of brokers or depository participants.
Hence, option (D) correctly identifies the custodian’s role in NSCCL settlement.