SIMPLE
Also written Submission of Instruction through Mobile Phone Login Easily
NSDL's facility letting a password-based SPEED-e user submit a Client-to-Clearing-Member Pool Account transfer instruction from a GPRS-enabled mobile phone.
In plain language
SPEED-e already lets an investor submit delivery instructions over the internet. SIMPLE takes one specific instruction out of that list and puts it on a phone. It stands for Submission of Instruction through Mobile Phone Login Easily.
A password-based SPEED-e user can use it to move securities from her own demat account straight into her broker's Clearing Member Pool Account, from her handset, on the SPEED-e website — no computer needed.
How it works
From Chapter 5, section 5.3.5: SIMPLE enables password-based users of SPEED-e to submit Client-to-Clearing-Member-Pool-Account transfer instructions, on the SPEED-e website, through mobile phones enabled with GPRS. It sits alongside other password-user conveniences added to SPEED-e, such as resetting a password by keying in a few parameters on the SPEED-e website itself.
A worked example
Mrs Fernandez, a password-based SPEED-e user, sells 150 shares through her broker while travelling and needs to move them into her broker's Clearing Member Pool Account to complete pay-in.
Using SIMPLE, she logs into the SPEED-e website from her GPRS-enabled mobile phone and submits the Client-to-CM-Pool-Account transfer instruction for those 150 shares directly — no computer, and no paper Delivery Instruction Slip.
Why NISM asks about it
Chapter 5, section 5.3.5, introduces SIMPLE as a mobile-specific SPEED-e feature. Expect the expansion of the acronym, and the fact that SIMPLE is specifically for Client-to-CM-Pool-Account transfers, not a general-purpose mobile substitute for every SPEED-e instruction.
Common exam traps
- SIMPLE is only for Client-to-Clearing-Member-Pool-Account transfers — not a general mobile replacement for every SPEED-e instruction.
- It is available to password-based SPEED-e users, the same user type the workbook mentions password reset for, in the same breath.
- Do not confuse SIMPLE with SPICE — SPICE is a Clearing Member's own POA-based auto pay-in instruction; SIMPLE is an ordinary client's own mobile instruction.
Check yourself
1.A Password User of SPEED-e can debit his demat account:
- a)In favour of any account
- b)Only in favour of specified Pre-Notified Clearing Member accounts, up to six
- c)Only in favour of accounts held with the same DP
- d)Not at all — password users can only view
Show the answer
Answer: (b) Only in favour of specified Pre-Notified Clearing Member accounts, up to six
Password Users can debit their demat accounts only in favour of specified Pre-Notified Clearing Member accounts (upto six), while Smart Card/e-Token User can submit instructions in favour of any number of accounts.
Option A describes the Smart Card/e-Token user. Option D confuses SPEED-e with IDeAS — SPEED-e is the instruction facility; IDeAS is the facility for viewing.
The credential also determines who may use it at all: a demat account holder will have the option of accessing SPEED-e either as a Password User or as a Smart Card/e-Token User. A Clearing Member must be a Smart Card/e-Token User to be able to access SPEED-e.
And one function is reserved for the stronger credential: as a smart card user, clients can also freeze or unfreeze their accounts by giving instructions through SPEED-e.
Both classes of user share some features: the launch of redemption of mutual fund units through SPEED-e facility... enable both type of users viz., password and e-Token users to give request to redeem the mutual fund units.
And password users have their own facility: SIMPLE, a facility that enables the password based users of SPEED-e facility to submit Client to Clearing Member Pool Account transfer instructions, on SPEED-e website through their mobile phones (enabled with GPRS).
Background: NSDL launched SPEED-e (pronounced as speedy) in September, 2001. Any DP of NSDL can subscribe to SPEED-e, the common infrastructure of NSDL. SPEED-e is available only to those DPs who have subscribed to it.
2.When securities are pledged or hypothecated, how do NSDL and CDSL differ?
- a)In NSDL the securities are transferred to a segregated or collateral account, while in CDSL they continue to lie in the BO's own account until invocation or closure
- b)In CDSL the securities are transferred to a segregated or collateral account, while in NSDL they remain in the BO's account
- c)Both transfer the securities to a segregated account
- d)Neither transfers the securities; both merely record a flag against the holding
Show the answer
Answer: (a) In NSDL the securities are transferred to a segregated or collateral account, while in CDSL they continue to lie in the BO's own account until invocation or closure
The workbook draws the distinction explicitly. The securities pledged/hypothecated are transferred to a segregated or collateral account through book entries in the records of NSDL. In case of CDSL, the securities pledged/hypothecated are not transferred to a segregated or collateral account through book entries in their records. The pledged/hypothecated securities continue to lie in the depository account of the BO (Pledgor/Hypothecator), until invocation or closure of pledge/hypothecation.
Option B is the same fact with the names swapped, which is exactly how this question is usually set — so read the depository names before the mechanics.
What is common to both is the purpose: securities held with the depository may be used as collateral to secure loans and other credits by the clients, and doing it through the depository makes the process very simple and cost effective. The economics are identical; only the bookkeeping differs.
Where this is taught
Free preparation for NISM Series VIRelated terms
- Clearing member accountThe special demat account a broker or custodian opens to settle exchange trades, through which clients' sold shares go to the clearing corporation and bought shares arrive; also called the pool account.
- Password UserA SPEED-e access mode that lets a demat account holder submit delivery instructions online but only to a maximum of six pre-notified Clearing Member accounts, unlike a Smart Card/e-Token user who faces no such cap.
- SPICEThe SPEED-e facility letting a Clearing Member, holding a client's Power of Attorney, submit auto pay-in instructions on the client's behalf, with no paper delivery instruction from the client.
- SPEED-eNSDL's internet-based facility, launched in September 2001, letting demat account holders and Clearing Members submit delivery instructions directly online instead of on paper.