A depository is a technology driven electronic storage system. All transactions of the investors are settled with greater speed and efficiency, as all securities are recorded in a ________ mode.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → book entry
Option (1) book entry — Correct. A depository has no paper share certificates or transfer forms. All securities are entered in a book entry mode, as electronic records, so transactions are settled with greater speed and efficiency.
Option (2) screen-based — Incorrect. Screen-based describes trading through computer terminals.
Option (3) carry forward — Incorrect. Carry forward is the badla system, which postpones delivery or payment to a later settlement period. It is about postponing a deal.
Option (4) rolling settlement — Incorrect. Rolling settlement is the settlement cycle, under which each trade is settled within 2 days. It fixes when trades are settled.
NCERT (Pre-rationalised Edition): “Depository Just like a bank keeps money in safe custody for customers, a depository also is like a bank and keeps securities in electronic form on behalf of the investor. In the depository a securities account can be opened, all shares can be deposited, they can be withdrawn/ sold at any time and instruction to deliver or receive shares on behalf of the investor can be given. It is a technology driven electronic storage system. It has no paper work relating to share certificates, transfer, forms, etc. All transactions of the investors are settled with greater speed, efficiency and use as all securities are entered in a book entry mode. …” |