06th Aug 2013

NISM-Series-VI: Depository Operations Certification Examination NISM/Certification/Series-VI: DOCE/2013/01 dated August 6, 2013

This is with reference to NISM/Certification/Series-VI: DOCE/2011/01 dated February 10, 2011, specifying that NISM-Series-VI: Depository Operations Certification Examination (DOCE) as the requisite standard for associated persons engaged or employed by a registered depository participant in:

(a) dealing or interacting with clients;

(b) dealing with securities of clients;

(d) internal control or risk management;

(e) activities having a bearing on operational risk; or

(f) maintenance of books and records pertaining to the above activities.

The examination is being offered to the candidates since February 21, 2011. In order to incorporate the market changes, NISM had initiated the process of updating the NISM-Series-VI: DOCE Examination. In this context, NISM will be launching the updated NISM-Series-VI: DOCE Examination with effect from September 24, 2013.

The `NISM-Series-VI: DOCE Examination in its current format (as per the existing workbook) will be available to the candidates till September 23, 2013 and will be replaced by the updated examination (as per the revised workbook) from September 24, 2013.

Details of the updated examination can be downloaded from the websites of NISM, NSE, BSE and MCX-SX.

Details of the updated NISM-Series-VI: Depository Operations Certification Examination is given in Annexure-I and Annexure-II of this communiqué/press release.

The text of these Annexures and the registration details are available at www.nism.ac.in.–sd–G. P. GargRegistrarNational Institute of Securities Markets Enclosures: Annexure I and II

Annexure I – Syllabus Outline (w.e.f September 24, 2013)NISM-Series-VIDepository Operations Certification Examination

Objective of the Examination

The examination seeks to create a common minimum knowledge benchmark for associated persons engaged or employed by a registered depository participant in:

(a) dealing or interacting with clients;

(b) dealing with securities of clients;

(d) internal control or risk management;

(e) activities having a bearing on operational risk; or

(f) maintenance of books and records pertaining to the above activities.

The certification aims to enhance the quality of services as rendered by the Depository Participants.

On successful completion of the examination the candidate should:

Know the basics of the Indian securities market and the depository system, the need for depository and the key features of the depository system in India.
Understand the institutional structure of the depository system in India and the business partners of a depository.
Understand the regulatory framework in which the depositories and its DPs function, their eligibility criteria, registration procedure, rights and obligations etc.
Know the various functions of the Depository and its Depository Participants (DPs) such as dematerialisation, trading and settlement, pledging and hypothecation.
Understand the process of opening a demat account, documents required to open an account and the significance of Power of Attorney (POA).

Examination Specifications

This is a computer-based examination with multiple choice questions.

The examination consists of 100 questions of 1 mark each adding to 100 marks.

The examination should be completed in 2 hours.

There shall be negative marking of 25% of the marks assigned to a question.

The passing score for the examination is 60 marks.NISM-Series-VI: Depository Operations Certification ExaminationSyllabus Outline with Weightages

Unit 1: Introduction to Securities Market 5%

Unit 2: introduction to Depository 10%

Unit 3: Depository and its business partners 11%

Unit 4: Functions of DP – Account Opening 11%

Unit 5: Functions of DP – Transmission & Nomination 5%

Unit 6: Functions of DP – Dematerialisation 8%

Unit 7: Functions of DP – Trading and Settlement 12%

Unit 8: Functions of DP – Pledge and Hypothecation 10%

Unit 9: Functions of DP – Corporate Action 5%

Unit 10: Functions of DP – Public Issues 5%

Unit 11: Functions of DP – Debt and Government Securities 10%

Unit 12: Additional Services – Warehouse Receipts 5%

Unit 13: Additional Services – Qualified Financial Institutions 1%

Unit 14: Additional Services – Rajiv Gandhi Equity Saving Schemes 1%

Unit 15: Additional Services – Basic Services Demat Account 1%

Annexure II – Test Objectives (w.e.f September 24, 2013) NISM-Series-VIDepository Operations Certification Examination

1 Introduction to the Capital Market

1.1 Introduction to the Capital Market

Explain the Indian Capital Market and its role in the economy

1.2 Capital Market

Explain the two segments in the capital market and the participants of capital market

1.3 Understand the regulatory environment in Indian capital market w.r.t SEBI Act, 1992, SC(R)A, 1956, Depositories Act 1996 and the Companies Act 1956

1.4 Know the Regulators in the Indian Capital market

2 Introduction to Depository

2.1 Explain the need for a depository system

Highlight the key features of the depository system in India and explain the structure of the depository system in India

2.2 Define a depository and understand and list the differences between a bank vis-à-vis a depository

2.3 Understand the legal framework in which the depositories function in India

Know the key regulations under the Depositories Act 1996, know the eligibility criteria for becoming a depository, and understand the registration process and the various rights and obligations of depositories. Understand the records which need to be maintained by a depository and the legal agreement between the depository and the issuers.

2.4 Explain and understand the various functions of a depository

3 Depository and its business partners

3.1 Understand depository participants (DPs)

Know the eligibility criteria for becoming a DP, Understand their business restrictions, Understand the procedure of application for becoming a DP and on what conditions registration is granted to DPs. Learn the validity and renewal process of registration certificate, their rights and obligations. Understand on what grounds a DP certificate can get suspended and or terminated.

3.2 Understand the Clearing Corporation/Clearing House

Explain and understand the criteria for being admitted to the depository as a user.

3.3 Issuers and RTAs

Know the eligibility criteria of becoming a RT&A, the rights and obligations of issuers and their RTAs. Know the role of issuer and RTA in demat of securities, remat of securities and in case of corporate benefits.

4 Functions of Depository Participant – Account Opening

4.1 Understand the types of account a person can open with a DP

4.2 Define and discuss what is a Beneficiary Account

Learn about the documents required while opening of account for verification, the procedure for opening an account, the different types of application forms for individual beneficial owner, joint account holders, companies, HUF, minors, partnership firms. Learn about the client participant agreement and the significance of the Power of Attorney (POA).

4.3 Clearing Member Account

Know the procedure for opening a clearing member account

4.4 Closure of account

Explain and understand the closure of an account on client’s request, closure on account of consolidation of accounts. Understand the procedure when closure is initiated by a DP. Know the process involved when mass shifting of account is initiated.

4.5 Freezing of account

Know the concept of freezing of account and when is it initiated.

4.6 Changes in client details

Understand the documentation and procedure for changes in the client details.

5 Functions of Depository Participant – Transmission and Nomination

5.1 Transmission of shares

Understand the concept of transmission of shares

5.2 Nomination of shares

Explain the concept of nomination of shares

5.3 Transmission of Securities

Understand the procedure of transmission of securities held singly with nomination, held singly without nomination and the procedure of transmission of securities held jointly in the depository, held by the karta of the HUF.

6 Functions of Depository Participant – Dematerialization

6.1 International Securities Identification Number

Explain the significance of ISIN. Understand which securities can be dematerialized

6.2 Explain the Dematerialization Process

Learn about the prerequisites for a demat request. Understand the procedure for demat and on what grounds a demat request is rejected. Explain transposition cum demat and transmission of securities.

6.3 Explain the Rematerialisation process

Explain the Prerequisites to a remat request and know the process of remat.

7 Functions of Depository Participant -Trading and Settlement

7.1 Introduction

Explain in brief the role of DP in facilitating the transfer of securities from one account to another on the instructions of the account holder.

7.2 Off-Market Transactions

Understand the process flow of securities (settlement) in an off-market transaction

7.3 Market Transactions

Learn the important terms related to transaction on a stock exchange viz., settlement number, clearing member, market type. Understand what is meant by delivery deadline.

Summarise the steps in pay-in & pay-out and explain the direct delivery by clearing corporation to client account. Discuss Inter-settlement transfers. Know about the procedure of automatic delivery-out, and inter-depository transfers

8 Special Services- Pledge and Hypothecation

8.1 Introduction

Introduce the concept of pledge and hypothecation

8.2 Procedure for pledge and hypothecation

Understand the procedure for creation of a pledge / hypothecation by a pledgor, Learn the procedure for confirmation of creation of pledge/hypothecation by pledgee. Learn the process of closure of a pledge/hypothecation by pledgor. Learn about Unilateral closure of pledge, Invocation of pledge by pledgee and Invocation of hypothecation. Understand the substitution of securities offered in pledge and the corporate benefits for pledged/hypothecated securities

9 Special Services – Corporate Action

9.1 Learn about corporate actions

9.2 Procedure for Corporate Action

Learn the process of corporate actions w.r.t Monetary Benefits, Non-Monetary Benefits, Rights Issue, Merger/Amalgamation/Capital reduction etc in the securities held with the depository.

Understand the Rights of lender (under stock lending scheme) and rights of the pledgor and hypothecator. Explain how the interest is paid on debt securities.

10 Special Services – Public Issues

10.1 Public Issues Procedure

Discuss the Public Issue facility through the depository

11 Special Services – Debt Instruments and Government Securities

11.1 Introduction to Debt Instruments and Government Securities

Explain the different debt instruments and Government securities available to the investors in the Indian securities market. Understand the procedure of Debt instrument to the depository system, Learn the key features of the debt instruments

11.2 Certificate of Deposit (CDs)

Learn how the certificate of deposit is dematerialized, settled and redeemed for those CDs which are traded.

11.3 Commercial Paper

Discuss the dematerialization of CPs, its settlement and redemption process.

11.4 Government Securities

Understand the specific features of dealing in Govt. securities such as account opening procedure, dematerialization of government securities held in physical form. Understand the process of transferring government securities in SGL form to Depository account.

12 Additional Services- Warehouse Receipts

12.1 Discuss how the Depository Participants provide facility to the commodity exchanges for settlement of trades pertaining to warehouse receipts for commodities.

13 Additional Services- Qualified Financial Institutions

13.1 Discuss who is a QFI? Understand the requirement for becoming a qualified DP.

14 Additional Services- Rajiv Gandhi Equity Saving Schemes

14.1 Discuss how the investors can open an account to invest in RGESS.

15 Additional Services- Basic Services Demat Account

15.1 Discuss the features of Basic Services Demat Account and the eligibility conditions required for opening BSDA.