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PASS RATE National Institute of Securities Markets NISM-Series-VII Certified Exam DUMP
NEW QUESTION # 85
Which of the following data fields must match between the transfer instruction and the Clearing Corporation's obligation data for a Pay-In instruction to be considered a 'Matched Instruction' and subsequently executed? (Select all that apply)
- A. TM ID (Trading Member ID)
- B. Client's Bank Account Number
- C. ISIN (International Securities Identification Number)
- D. UCC (Unique Client Code)
- E. CM ID (Clearing Member ID)
Answer: A,C,D,E
Explanation:
The text states that in case of matching of all details like 'UCC, TM ID, CM ID, ISIN, quantity, settlement details etc.' of the transfer instruction with the obligation data, the instruction shall be carried out. The Client's Bank Account Number is not mentioned as a validation parameter for securities pay-in.
NEW QUESTION # 86
Regarding the operation of the 'Clearing Bank Account' maintained by a Clearing Member, which of the following operational restrictions is explicitly mandated to ensure the account is used exclusively for clearing and settlement operations?
- A. Funds can be deposited only via Demand Drafts and withdrawn only via electronic transfer.
- B. Withdrawals are permitted only after obtaining a 'No Objection Certificate' from the Clearing Corporation for each transaction.
- C. Clearing members are prohibited from depositing proprietary funds into this account; only client funds are permitted.
- D. The account must maintain a minimum balance equal to the Base Minimum Capital (BMC) at all times.
- E. Clearing members can deposit funds in any form but can withdraw funds from these accounts only in self-name.
Answer: E
Explanation:
The source states: 'Clearing member can deposit fund in these accounts in any form but withdraw funds from these accounts only in self-name.' This ensures the account is used for its intended purpose of clearing and settlement.
NEW QUESTION # 87
In the context of 'Network Security' for Internet Based Trading systems, specific measures are mandatory to protect the exchange connectivity. Which of the following accurately describes the requirement regarding Firewalls and Server Access?
- A. Firewalls are optional if 2FA is implemented; Server access must use HTTP protocol.
- B. Firewalls are required only for Wireless Trading; Server access must use simple text authentication.
- C. Firewalls must be placed only at the client terminal end; Server access requires a static IP address without SSL.
- D. Suitable Firewalls must be placed between the broker's back office and the Internet; Server access must use VPN only.
- E. Suitable Firewalls must be placed between the Internet trading set-up and the trading set-up directly connected to the Exchange; Server access must use Secured Socket Level Security.
Answer: E
Explanation:
The mandatory security features include: Secured Socket Level Security for server access through Internet and Suitable Firewalls between trading set-up directly connected to an Exchange trading system and the Internet trading set-up.
NEW QUESTION # 88
When a stock broker undertakes 'Video In-Person Verification' (VIPV) for client on-boarding through a digital medium, which of the following operational conditions must be strictly ensured?
- A. The client is not required to display the officially valid document in the video if Aadhaar e-KYC is used.
- B. The VIPV recording is optional if the client provides a digitally signed self-declaration.
- C. The VIPV process can be fully automated using Artificial Intelligence without the need for any authorized official's interaction.
- D. The VIPV must be conducted offline and the recording uploaded to the KRA system later.
- E. The intermediary shall ensure that the photograph downloaded through the Aadhaar authentication process matches with the investor in the VIPV.
Answer: E
Explanation:
The source states that for VIPV: 'The intermediary shall ensure that photograph of the client downloaded through the Aadhaar authentication / verification process matches with the investor in the VIPV.' Also, the VIPV must be in a live environment, and include random questions/responses.
NEW QUESTION # 89
Under the ODR framework, what is the specific monetary threshold regarding the aggregate claim/counter-claim amount that necessitates the reference of the matter to an **Arbitral Tribunal consisting of three Arbitrators**?
- A. Exceeds Rs. 50,00,000(Rupees Fifty Lakhs)
- B. Exceeds Rs. 20,00,000(Rupees Twenty Lakhs)
- C. Exceeds Rs. 10,00,000 (Rupees Ten Lakhs)
- D. Exceeds Rs. 30,00,000 (Rupees Thirty Lakhs)
- E. Exceeds Rs. 1,00,00,000 (Rupees One Crore)
Answer: D
Explanation:
The source specifies: 'In the event that the aggregate of the claim and/or counter-claim amount exceeds Rs 30,00,000 (Rupees Thirty Lakhs) or such amount as specified from time to time, the matter shall be referred to an Arbitral Tribunal consisting of three Arbitrators'.
NEW QUESTION # 90
For un-expired illiquid futures contracts on an individual security, how is the Daily Settlement Price determined by the Clearing Corporation?
- A. It is the weighted average price of the contract during the last half an hour of trading.
- B. It is fixed at the previous day's settlement price adjusted for the risk-free interest rate.
- C. It is based on the closing price of the underlying security in the Capital Market Segment.
- D.
- E. It is determined by the FIMMDA / FBIL reference rate.
Answer: D
Explanation:
NEW QUESTION # 91
Stock Exchanges are required to maintain an Investor Services Fund (ISF) distinct from the Investor Protection Fund (IPF). What is the specific contribution requirement from the Stock Exchange towards the ISF?
- A. 100% of the interest earned on the 1% security deposit of issuer companies.
- B. 1% of the listing fees received, on a quarterly basis.
- C. 5% of the transaction charges collected from members.
- D. The penalty collected for client code modification.
- E. At least 20% of the listing fees received.
Answer: E
Explanation:
For the Investor Services Fund (ISF), the text states: 'The stock exchange shall set aside at least 20% of the listing fees received for ISF for providing services to the investing public.' Note that 1% of listing fees goes to the IPF, while 20% goes to the ISF.,
NEW QUESTION # 92
In the context of the modernization of services provided by brokers, how are research advice and recommendations increasingly being delivered to clients?
- A. Only through the official website of the Stock Exchange.
- B. Through SMS on to the mobile phone.
- C. Strictly through in-person meetings at the broker's branch office.
- D. Exclusively through physical contract notes sent via post.
- E. Via recorded voice messages on landline telephones only.
Answer: B
Explanation:
The text states that advice and recommendations can be obtained as on to the mobile phone". It further notes, 'So, it is more online now.'
NEW QUESTION # 93
When a Partnership Firm registered under the Indian Partnership Act, 1932 applies for admission as a member of a Stock Exchange, which specific structural requirement must be identified and maintained as per Exchange norms?
- A. The applicant must identify a Dominant Promoter Group.
- B. The firm must convert to a Limited Liability Partnership within 1 year.
- C. The firm must maintain a static profit-sharing ratio for 5 years.
- D. A minimum of 51% of capital must be held by a designated clearing bank.
- E. All partners must hold NISM Series-VII certification.
Answer: A
Explanation:
As per the eligibility criteria for Partnership Firms, the applicant must identify a Dominant Promoter Group as per the norms of the Exchange at the time of making the application. Any change in the shareholding of the partnership firm, including that of the Dominant Promoter Group or their sharing interest, requires prior permission from the Exchange/SEBI.
NEW QUESTION # 94
Regarding participation in the International Financial Services Centres (IFSC), which of the following categories of resident investors is eligible to deal in securities listed in IFSC?
- A. Only resident Qualified Institutional Buyers (QIBs).
- B. Residents are strictly prohibited from dealing in securities listed in IFSC.
- C. A person resident in India eligible under FEMA to invest funds offshore, to the extent allowed under the Liberalized Remittance Scheme (LRS).
- D. Only resident corporate entities with a net worth exceeding Rs. 100 Crore.
- E. Any resident individual irrespective of investment limit.
Answer: C
Explanation:
As per SEBI (International Financial Services Centres) Guidelines, 2015, a person resident in India who is eligible under FEMA to invest funds offshore, to the extent allowed under the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India, is permitted to deal in securities listed in IFSC.
NEW QUESTION # 95
Under what specific circumstance is a broker or client strictly **prohibited** from unblocking securities that have been blocked in favour of the Clearing Corporation?
- A. If the block was created using a physical Delivery Instruction Slip (DIS) instead of eDlS.
- B. If the Trading Member has not yet transferred the securities to the Clearing Member's pool account.
- C. If the Early Pay-In (EPI) benefit has already been provided by the Clearing Corporation to the client for those securities.
- D. If the client has an outstanding margin obligation in the derivatives segment.
- E. If the market price of the security increases by more than 5% during the trading day.
Answer: C
Explanation:
The regulations stipulate that the Broker or client shall not be allowed to unblock securities if the Early Pay-In (EPI) benefit is provided by the Clearing Corporation to the client for the same.
NEW QUESTION # 96
According to the requirements for maintaining books of account, what specific details must be recorded in the 'Register of Transactions' (Sauda Book)?
- A. Receipts and payments of funds involving clients, distinguishing between margin and settlement obligations.
- B. Details of all dematerialized securities held in the broker's pool account and beneficiary account.
- C. Only the net obligation of funds and securities to be settled with the Clearing Corporation.
- D. Each transaction effected, showing the name of the security, its value, rates gross and net of brokerage, and names of the clients.
- E. General expenses, overheads, salaries, and petty cash adjustments for the broking firm.
Answer: D
Explanation:
The Register of Transactions (Sauda Book) is required to include each transaction effected. It must show the name of the security, its value, rates gross and net of brokerage, and names of the clients.
NEW QUESTION # 97
What is the primary benefit of 'Interoperability' among Clearing Corporations for a Clearing Member (CM)?
- A. It allows the CM to act as a Custodian for institutional clients without separate registration.
- B. It allows the CM to execute trades on the Exchange without maintaining a Base Minimum Capital.
- C. It mandates the CM to maintain separate settlement accounts for each Exchange, thereby segregating risk.
- D. It guarantees that the CM will receive interest on the cash component of the Core Settlement Guarantee Fund.
- E. It enables the CM to select a single Clearing Corporation to clear and settle trades executed on multiple stock exchanges.
Answer: E
Explanation:
Inter-operability among Clearing Corporations enables a Clearing Member to select the Clearing Corporation of its choice to clear and settle trades executed in multiple exchanges. This allows market participants to consolidate their clearing and settlement functions at a single Clearing Corporation.
NEW QUESTION # 98
Select the correct statements regarding the 'Settlement of Funds' and 'Mode of Payment' compliance requirements for stock brokers.
(Select all that apply)
- A. All payments from/to clients must be strictly by account payee crossed cheques/demand drafts or direct credit into the bank account.
- B. Brokers are permitted to accept cash from clients for margin purposes up to Rs. 20,000.
- C. Brokers must maintain an audit trail of funds received through electronic fund transfers to ensure they are from the client's own account.
- D. Authorization for maintaining a running account can be signed by the client's Power of Attorney (POA) holder.
- E. For clients with outstanding obligations on the settlement date, the broker may retain the requisite funds towards such obligations.
Answer: A,C,E
Explanation:
Statement A is incorrect; Brokers should 'not accept cash'. Statement B is correct. Statement C is incorrect; authorization must be signed 'by the client only and not by any... holder of the Power of Attorney'. Statement D is correct. Statement E is correct.
NEW QUESTION # 99
In the context of Market Participants, which of the following statements accurately characterizes the regulatory status and operational scope of a 'Custodian' in the securities market?
- A. Custodians are exempt from registration with SEBI if they are registered banks.
- B. Custodians are registered as Trading Members but outsource clearing to PCMs.
- C. Custodians are Clearing Members (like PCMs) but do not possess trading rights.
- D. Custodians automatically act as the counterparty for all institutional trades.
- E. Custodians are primarily responsible for executing trades on the exchange floor.
Answer: C
Explanation:
Custodians are defined as entities that settle trades on behalf of the clients of trading members. They are classified as Clearing Members (similar to Professional Clearing Members) but they do not have trading rights. They require specific registration with SEBI to provide custodial services.
NEW QUESTION # 100
In the context of risk management for the T+0 settlement cycle, how are securities shortages handled if a selling member fails to deliver shares?
- A. Security shortages are directly closed out at 10% above the highest price of the day across all exchanges for the T+0 market.
- B. The trade is annulled, and the buyer is refunded the transaction amount without penalty.
- C. By imposing a standard valuation debit of 20% above the closing price.
- D. By conducting an auction session on T+1 day along with the regular market auction.
- E. By conducting an auction session on T+0 day at 2:30 PM.
Answer: A
Explanation:
The source states that 'Auction shall not be conducted in case of securities shortage. Security shortages shall be directly closed out at 10% above the highest price of the day across all exchanges for T+0 market.'
NEW QUESTION # 101
In the context of stock brokers providing mutual fund services, what specific compliance obligation is imposed by Regulation 4(g) of the SEBI (Investment Advisers) Regulations, 2013?
- A. Stock brokers must maintain a minimum net worth of Rs. 1 Crore to offer investment advice.
- B. Stock brokers must route all mutual fund advisory transactions through a separate subsidiary company.
- C. Stock brokers must ensure client level segregation of advisory and distribution activities at the entity and group level.
- D. Stock brokers must obtain a separate license from AMFI for providing advisory services.
- E. Stock brokers are prohibited from charging any commission on mutual fund distribution if they are registered as InvestmentAdvisers.
Answer: C
Explanation:
Regulation 4(g) of SEBI (Investment Advisers) Regulations, 2013 requires stock brokers to comply with general obligations... which, inter-alia, provide that client level segregation of advisory and distribution activities needs to be ensured at the entity and group level.
NEW QUESTION # 102
A Trading Member (TM) has the following positions in a specific stock futures contract at the end of a trading day:
Proprietary Account: Buy 2000, Sell 1500
Client A: Buy 1000, Sell 1200
Client B: Buy 500, Sell 100
Based on the methodology for determining the open positions of clearing members in the derivatives segment, what is the TM's 'Open Position' for this contract?
- A. 900 contracts (Gross Proprietary + Net Client Position)
- B. 1100 contracts (Net Proprietary + Absolute Net Client Long + Absolute Net Client Short)
- C. 6300 contracts (Gross Buy + Gross Sell of all accounts)
- D. 500 contracts (Net Proprietary Position only)
- E. 700 contracts (Net Proprietary + Net Client Position)
Answer: B
Explanation:
A trading member's open position is arrived at by summing up his proprietary and client's open positions. Proprietary positions are calculated on a net basis (Buy - Sell). Client positions are netted at the client level (contract level) and then added up across clients (without netting between clients).
Proprietary Net: 2000 - 1500 = +500 (Long).
ClientA Net: 1000 - 1200 = -200 (Short).
Client B Net: 500 - 100 = +400 (Long).
TM Open Position = Proprietary Open Position (500) + Client Open Long (400) + Client Open Short (200) = 1100 contracts.
NEW QUESTION # 103
Identify the correct expiry and settlement logic for Currency Derivative contracts (USD-INR) traded on Indian stock exchanges.
- A. Contracts expire on the 1 5th of every month; Settlement is cash settled based on the crossing of FCY-INR rates.
- B. Contracts expire on the last Thursday of the month; Settlement is physical delivery of the foreign currency.
- C. Contracts expire two working days prior to the last business day of the month; Final Settlement Price is the average spot rate of the last 30 minutes.
- D. Contracts expire on the last working day of the month; Final Settlement Price is the RBI Reference Rate.
- E. Contracts expire two working days prior to the last business day of the expiry month at 12:30 pm; Final Settlement Price is the FBIL reference rate.
Answer: E
Explanation:
For Currency Derivatives (USD-INR), the source states: 'The expiry day/ last day for the trading of the monthly contract shall be two working days prior to the last business day of the expiry month at 12.30 pm.' and 'The final settlement price for USDINR... is the FBIL (Financial Benchmarks India Pvt. Ltd.) reference rate.'
NEW QUESTION # 104
Which of the following statements accurately describe the rules and procedures for **Dividend Adjustment** in the Equity F&O segment?
(Select all that apply)
- A. In case of extra-ordinary dividend, the total dividend amount is reduced from all strike prices of option contracts.
- B. If shareholders in the AGM change the rate declared by the Board, the market price reference changes to the closing price on the day previous to the AGM.
- C. Dividends below 2% of the market value of the underlying stock are deemed ordinary dividends and no adjustment is made.
- D. Adjustment for extra-ordinary dividend is carried out only on futures contracts, not options.
- E. The revised strike prices due to extra-ordinary dividend are applicable from the record date.
Answer: A,B,C
Explanation:
StatementA is correct: Dividends below 2% are ordinary and not adjusted. Statement B is correct: Total dividend amount is reduced from strike prices. Statement D is correct: If AGM changes the rate, the reference is the closing price previous to the date of the AGM. Statement C is incorrect because revised prices are applicable from the ex.dividend date. Statement E is incorrect as adjustments apply to strike prices of options as well.
NEW QUESTION # 105
When a corporate action adjustment (such as a bonus ratio of 3:7) results in fractions, a specific methodology is adopted to minimize fraction settlements. How are the Strike Price and Market Lot rounded off in this process?
- A. Strike Price: Nearest integer; Market Lot: Nearest tick size
- B. Strike Price: Nearest tick size; Market Lot: Nearest integer
- C. Strike Price: Rounded up to nearest integer; Market Lot: Rounded down to nearest 100
- D. Strike Price: Rounded down to nearest tick; Market Lot: Rounded up to nearest integer
- E. Strike Price: Exact value up to 2 decimal places; Market Lot: Exact value
Answer: B
Explanation:
With a view to minimizing fraction settlements, the methodology adopted includes carrying out rounding off for the Strike Price to the nearest tick size and Market Lot to the nearest integer.
NEW QUESTION # 106
Regarding the netting of settlement obligations for a member trading in both T+1 and T+0 cycles, which of the following statements is operationally correct?
- A. There shall be no netting in pay-in and pay-out obligations between T+1 and T+0 settlement cycles.
- B. Netting is allowed only if the member opts for the 'Unified Settlement' facility provided by the Clearing Corporation.
- C. Obligations are netted across both cycles to reduce liquidity stress.
- D. Securities delivered in T+0 pay-out can be immediately netted against T+1 pay-in obligations for the same day.
- E. Netting is permitted only for funds, while securities obligations are kept separate.
Answer: A
Explanation:
The operational guidelines for the T+0 rolling settlement cycle explicitly state: 'There shall be no netting in pay-in and pay-out obligations between T+1 and T+0 settlement cycle.'
NEW QUESTION # 107
In the context of the beta version of the T+0 rolling settlement cycle, how is the applicable price band for a security determined and managed relative to the regular T+1 market?
- A. It operates with a price band of +100 basis points from the price in the regular T+1 market, re-calibrated after every 50 basis points movement in the underlying T+1 market.
- B. It operates with a fixed price band of +/- 5% irrespective of the movement in the T+1 market.
- C. It operates with a price band of +50 basis points from the opening price of the T+0 market, without any re-calibration during the session.
- D. It is set at +1- 1% of the previous day's closing price and remains static throughout the trading session 09:15 AM to 3:30 PM.
- E. It mirrors the dynamic price band of the T+1 market exactly, flexing only when the T+1 market hits its circuit limit.
Answer: A
Explanation:
According to the operational details for T+0 settlement, the price in the T+0 segment will operate with a price band of +100 basis points from the price in the regular T+1 market. This band will be re-calibrated after every 50 basis points movement in the underlying T+1 market.
NEW QUESTION # 108
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