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NEW QUESTION # 170
Which of the following operational parameters and exclusions are correctly associated with the framework for the beta version of the T+0 rolling settlement cycle? (Select all that apply)
- A. The price band is fixed at +1-5% relative to the T+1 market price without re-calibration.
- B. Security shortages are handled through a dedicated auction session on T+0 day.
- C. Pay-in for sell obligations is allowed only via Early Pay-In using the block mechanism.
- D. Trading is not permitted on the Ex-date of securities.
- E. Pre-Open, Special Pre-Open, and Post close sessions are not applicable.
Answer: C,D,E
Explanation:
Option A is correct: No trading for T+0 settlement on Ex-date of securities. Option C is correct: Pre-Open, Special Pre-Open, and Post close sessions are not applicable. Option D is correct: Pay-in is allowed only by way of early pay-in using block mechanism. Option B is incorrect as auctions are not conducted (direct close-out applies). Option E is incorrect as the price band is +1- 100 bps with re-calibration.
NEW QUESTION # 171
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. The revised strike prices due to extra-ordinary dividend are applicable from the record date.
- C. Adjustment for extra-ordinary dividend is carried out only on futures contracts, not options.
- D. 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.
- E. Dividends below 2% of the market value of the underlying stock are deemed ordinary dividends and no adjustment is made.
Answer: A,D,E
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 # 172
In the context of the 'SEBI Complaints Redress System (SCORES 2.0)', which of the following accurately describes the 'Review' mechanism available to a complainant who is dissatisfied with the resolution provided by the regulated entity?
- A. No review option is available; the complainant must approach the civil court immediately.
- B. A review by the Investor Service Centre of the nearest Stock Exchange within 30 days.
- C. A single-level review conducted directly by the Securities Appellate Tribunal (SAT).
- D. Two levels of review: First by the 'Designated Body' and Second by SEBI.
- E. A mandatory arbitration process initiated automatically upon dissatisfaction.
Answer: D
Explanation:
SCORES 2.0 provides two levels of review: First review by the 'Designated Body' if the investor is dissatisfied with the resolution provided by the concerned regulated entity. Second review by SEBI if the investor is still dissatisfied after the first review.
NEW QUESTION # 173
To calculate the Adjustment Factor for a **Rights Issue** in the Equity F&O segment, the 'Benefits per share (E)' must first be determined. Which formula correctly represents the calculation of 'E'?
- A.
- B.
- C.
- D.
- E.
Answer: B
Explanation:
In the context of Rights Issue adjustment, Benefits per share (E) is calculated using the formula: E = (P - S) * A1 (A + B), where P is the underlying close price on the last cum date, S is the issue price of the rights, A is the Rights Entitlement, and B is the Number of Existing shares.
NEW QUESTION # 174
When a delivery shortage is identified before the auction is conducted, the Clearing Corporation debits the clearing member by an amount equivalent to the securities not delivered, valued at a specific price. What is this pre-auction debit transaction formally called?
- A. Valuation Debit
- B. Close-out Penalty
- C. Auction Entry Fee
- D. Shortage Collateral Block
- E. Provisional Margin Call
Answer: A
Explanation:
Once shortages are identified, the members are debited by an amount equivalent to the securities not delivered and valued at a valuation price. This is known as 'valuation debit'.
NEW QUESTION # 175
The Money Market in India comprises various segments based on the tenor and type of instrument. Which of the following statements correctly describe the features of these segments/instruments? (Select all that apply)
- A. Certificate of Deposits (CDs) issued by All India Financial Institutions can have a maturity period not less than 1 year and not exceeding 3 years.
- B. Commercial Papers (CPs) can be issued for maturities exceeding 1 year.
- C. Call Money market is meant for overnight lending and borrowing.
- D. Term Money market involves lending and borrowing for a period between 15 days and 1 year.
- E. Notice Money market involves lending and borrowing for a period between 2 days and 14 days.
Answer: A,C,D,E
Explanation:
Call Money is predominantly overnight. Notice Money is for 2-14 days. Term Money is for 15 days to 1 year. Certificate of Deposits (CDs) can be issued by All India Financial Institutions for a period not less than 1 year and not exceeding 3 years (Banks issue for up to 1 year). Commercial Papers (CPs) are issued for maturities between 7 days and one year; thus, option E is incorrect.
NEW QUESTION # 176
Which of the following services can a Depository Participant (DP) engage in, as explicitly listed in the NISM workbook? (Select all that apply)
- A. Receiving electronic credit in respect of securities allotted by issuers under IPO
- B. Issuing equity research reports for the depository
- C. Freezing of the demat account for debits, credits, or both
- D. Underwriting of Initial Public Offers (IPOs)
- E. Pledging of dematerialized securities & facilitating loans against shares
Answer: A,C,E
Explanation:
The services a DP can engage into include: Receiving electronic credit in respect of securities allotted by issuers under IPO; Pledging of dematerialized securities & facilitating loans against shares; Freezing of the demat account for debits, credits, or both. Research reports and Underwriting are not listed as DP services in this section.
NEW QUESTION # 177
Select the correct combination of statements regarding the expiry cycle and settlement of Long Dated Index Options and Equity Index Futures in the Indian Securities Market.
- A. Statement I: All Index Futures are physically settled. Statement II: Long dated options expire on the first Thursday of the quarter.
- B. Statement I: Index Futures are cash settled. Statement II: Long dated options have a maximum expiry of 12 months.
- C. Statement I: Index Futures expire on the last Friday of the month. Statement II: Long dated options follow only a monthly expiry cycle.
- D. Statement I: Index Futures are physically settled. Statement II: Long dated options have a 3-year expiry cycle.
- E. Statement I: All Index Futures are cash settled. Statement II: Long dated options are available up to a 5-year expiry cycle with quarterly and half-yearly expiries.
Answer: E
Explanation:
The source states: 'All Index future and option contracts are cash settled.' Regarding expiry cycles: 'Monthly index contracts generally have 3-month expiry cycle except for the long dated options contracts which are available up to 5-year expiry cycle with quarterly expiries (March, June, Sept & Dec cycle) and half yearly expiries (Jun, Dec cycle).'
NEW QUESTION # 178
A Trading Member executes sell orders in the T+0 settlement cycle. What is the mandatory mechanism required to fulfill the pay-in of securities for these sell obligations?
- A. Only by way of early pay-in (EPI) using the block mechanism.
- B. Transfer to the Member Pool Account by 10:30 AM on T day.
- C. Inter-depository transfer to the settlement account of the Clearing Corporation post-trading hours.
- D. Standard pay-in instruction via physical DIS submitted to the Depository Participant.
- E. Auto-pledge of securities in favor of the Clearing Corporation.
Answer: A
Explanation:
The regulations specify that pay-in for T+0 sell obligations shall be allowed only by way of early pay-in using block mechanism.
NEW QUESTION # 179
Clearing Corporations are required to conduct various tests to ensure the adequacy of the Core SGF. What is the specific purpose of the 'Reverse Stress Test' as defined in the risk management framework?
- A. To determine the daily settlement price of illiquid futures contracts.
- B. To identify under which market conditions and scenarios the combination of margins, Core SGF, and other financial resources would prove insufficient.
- C. To test the operational capability of the backup disaster recovery site.
- D. To validate the accuracy of the software used for margin calculation.
- E. To calculate the historical volatility of the most liquid securities over the past 5 years.
Answer: B
Explanation:
The source defines Reverse stress test as: 'CC shall periodically carry out reverse stress tests designed to identify under which market conditions and under what scenarios the combination of its margins, Core SGF and other financial resources prove insufficient to meet its obligations'.
NEW QUESTION # 180
Stock brokers are required to maintain evidence of clients placing orders to prevent unauthorized trades. Which of the following statements accurately describes the regulatory requirements regarding the forms of evidence and the retention period?
- A. Evidence can be physical records, telephone recordings, emails, or SMS logs, and must be retained for a minimum of 3 years.
- B. Evidence must be physical records only, retained for 5 years.
- C. In case of a dispute, records can be disposed of immediately after the broker files a response.
- D. Evidence is optional for internet-based transactions and must be retained for 1 year.
- E. Telephone recordings are mandatory only for institutional clients and must be kept for 2 years.
Answer: A
Explanation:
The source states that brokers shall execute trades only after keeping evidence in forms such as 'Physical record written & signed by client, Telephone recording, Email from authorized email id, Log for internet transactions, Record of SMS messages'. Regarding retention: 'The Brokers are required to maintain the records for a minimum period for which the arbitration accepts investors' complaints as notified from time to time (which is currently three years).'
NEW QUESTION # 181
What is the primary benefit of 'Interoperability' among Clearing Corporations for a Clearing Member (CM)?
- A. It mandates the CM to maintain separate settlement accounts for each Exchange, thereby segregating risk.
- B. It allows the CM to execute trades on the Exchange without maintaining a Base Minimum Capital.
- C. It allows the CM to act as a Custodian for institutional clients without separate registration.
- D. It enables the CM to select a single Clearing Corporation to clear and settle trades executed on multiple stock exchanges.
- E. It guarantees that the CM will receive interest on the cash component of the Core Settlement Guarantee Fund.
Answer: D
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 # 182
Besides the settlement of fund obligations, the distinct clearing bank account opened by a Clearing Member is mandated to be used for which of the following sets of transactions?
- A. Payment of staff salaries, office maintenance, and proprietary trading losses.
- B. Disbursement of loans to clients and interest payments on overdraft facilities.
- C. Payment of margins, release and enhancement of collateral, and payment of penal charges.
- D. Collection of dividends, payment of stamp duty to state governments, and GST payments.
- E. Investment in mutual funds, IPO applications, and portfolio management services.
Answer: C
Explanation:
The clearing bank account is exclusively for clearing and settlement operations. Specifically, it is used for settlement of fund obligations, payment of margins, release and enhancement of collateral, Early Pay-ln (EPI) of funds, and penal charges.
NEW QUESTION # 183
To safeguard client funds during the running account settlement process, SEBI has stipulated specific banking procedures. Which of the following statements correctly describes the requirement regarding the 'Up Streaming Client Nodal Bank Account' (USCNBA) during settlement?
- A. USCNBA funds must be transferred to the Clearing Corporation's settlement account before being paid out to clients.
- B. The USCNBA is used only for receiving funds from the Exchange, while client receipts are deposited in the Settlement Account.
- C. Funds in the USCNBA can be used for inter-client adjustments if the clients have provided specific consent in the KYC form.
- D. Trading Members must ensure that funds received from clients whose running account has been settled remain in the USCNBA and are not used to settle other clients.
- E. Funds can be moved to the broker's proprietary account temporarily to facilitate faster settlement payouts.
Answer: D
Explanation:
To safeguard against misuse, Trading Members shall ensure that funds, if any, received from clients whose running account has been settled, remain in the 'Up Streaming Client Nodal Bank Account' and no such funds shall be used for settlement of running account of other clients.
NEW QUESTION # 184
Consider the following trading data for Broker 'Y' in Security ABC on a specific trading day:
1. Sold 200 shares @ Rs. 10 to Broker X
2. Bought 50 shares @ Rs. 10.50 from Broker Z
3. Bought 300 shares @ Rs. 11 from Broker X
Calculate the Net Fund Obligation for Broker 'Y' to be settled with the Clearing Corporation.
- A. Pay Rs. 1,825
- B. Receive Rs. 2,000
- C. Pay Rs. 3,825
- D. Receive Rs. 1,575
- E. Pay Rs. 1,200
Answer: A
Explanation:
Calculations based on the source example for Broker Y:
Sell Value: 200 * 10 = Rs. 2,000 (Inflow)
Buy Value: (50 10.50) + (300 * 11) = 525 + 3,300 = Rs. 3,825 (Outflow)
Net Fund Obligation = Inflow - Outflow = 2,000 - 3,825 = -1 ,825.
Since the value is negative, Broker Y has to Pay Rs. 1,825.
NEW QUESTION # 185
Which of the following statements accurately describe the operational guidelines for the Online Dispute Resolution (ODR) mechanism in the Indian Securities Market? (Select all that apply)
- A. The conciliator shall attempt to reach a resolution within 21 calendar days, which can be extended by a maximum of 10 calendar days by consent.
- B. The ODR Institution must appoint a sole independent and neutral conciliator within 5 days of receipt of the reference.
- C. If a Market Participant wishes to pursue online arbitration following an unsuccessful conciliation, they must deposit 50% of the admissible claim value with the relevant Mll.
- D. Investors must mandatorily exhaust the SCORES portal process before they can initiate any dispute resolution through the ODR Portal.
- E. The Market Participant can initiate dispute resolution through the ODR Portal after giving due notice of at least 15 calendar days to the investor.
Answer: A,B,E
Explanation:
Option A is correct: Market Participants can initiate ODR with 15 days notice. Option B is correct: Appointment is within 5 days. Option D is correct: Timeline is 21 days + 10 days extension. Option C is incorrect because the deposit requirement is 100% of the admissible claim value. Option E is incorrect because investors can initiate ODR if the grievance with the Market Participant is not resolved satisfactorily, or at any stage of subsequent escalations.
NEW QUESTION # 186
Regarding the limitation period for filing complaints, what is the maximum time period from the 'date of cause of action' within which an investor must lodge a complaint on SCORES, provided they have first approached the concerned entity and are unsatisfied with the response?
- A. One year
- B. Three years
- C. Five years
- D. Two years
- E. Six months
Answer: A
Explanation:
In line with enhancing ease, speed, and accuracy, the investor may lodge a complaint on SCORES within one year from the date of cause of action, provided specific conditions (like rejection by the entity or non-receipt of communication) are met.
NEW QUESTION # 187
If a selling broker fails to deliver securities, the Clearing Corporation conducts an auction. If this auction remains unresolved because there are no sellers (Auction Fail), the transaction is subject to a 'Close out'. How is the close-out price calculated to compensate the buyer in such a scenario?
- A. At the standard valuation price determined by the Clearing Corporation on the T+1 pay-in day.
- B. At the highest price recorded on the exchange on the trade day only, irrespective of subsequent price movements.
- C. At the closing price of the securities on the auction day plus a fixed penalty of 5%.
- D. At the average weighted trade price of the security during the last 5 trading sessions plus brokerage and statutory levies.
- E. At the highest price prevailing across the exchange from the day of trading up to the auction day OR 20% above the official closing price on the auction day, whichever is higher.
Answer: E
Explanation:
According to the close-out procedure, if on the auction day there are no sellers, the Clearing Corporation carries out a 'Close out'. In this process, the buyer is compensated by paying the value of the short delivered security at the 'highest price prevailing across the stock exchange from the day of trading till the auction/close out day or 20% above the official closing price on the auction day, whichever is higher'.
NEW QUESTION # 188
In the event of holidays affecting the settlement schedule, Clearing Corporations (CCs) follow specific guidelines to ensure smooth settlement. Which of the following statements accurately describes the procedure for sequential settlement and inter-depository transfers?
- A. CCs club multiple settlements into a single netted obligation to avoid sequential processing delays.
- B. CCs prioritize the settlement with the highest value regardless of the chronological order of trade dates.
- C. Depositories must facilitate inter-depository transfers within one hour and before the pay-in for the subsequent settlement begins.
- D. Settlements are postponed to the next working week to ensure all banks are operational.
- E. The pay-out from the first settlement is blocked for 24 hours and cannot be used for the subsequent settlement's pay-in.
Answer: C
Explanation:
To meet pay-in obligations for subsequent settlements during holidays, members may need to move securities from one depository to another. The depositories shall, therefore, facilitate the inter-depository transfers within one hour and before pay-in for the subsequent settlement begins.
NEW QUESTION # 189
When a short delivery is identified, the Clearing Corporation debits the member by an amount equivalent to the securities not delivered valued at a specific price. What is this specific debit termed as?
- A. Valuation Debit
- B. Auction Pre-payment
- C. Shortage Penalty
- D. Provisional Margin Debit
- E. Close-out Debit
Answer: A
Explanation:
Once shortages are identified, the members are debited by an amount equivalent to the securities not delivered and valued at a valuation price. This is known as valuation debit. (Section 6.5)
NEW QUESTION # 190
In the context of the validation process for Pay-In of securities from a client's demat account to the Member Pool Account, how do Depositories handle a specific transfer instruction where the quantity specified in the instruction exceeds the client-wise net delivery obligation provided by the Clearing Corporation?
- A. The instruction is partially processed by the depositories up to the matching obligation quantity.
- B. The instruction is kept pending until the Clearing Corporation updates the obligation to match the instruction.
- C. The instruction is processed fully, but the excess securities are immediately returned to the client's account by the Clearing Member.
- D. The instruction is processed fully, creating an excess balance in the Member Pool Account which is flagged for audit.
- E. The instruction is rejected in its entirety due to the discrepancy in quantity.
Answer: A
Explanation:
According to the validation process rules: 'If the quantity in instruction is more than the obligation provided by CC, then the instruction will be partially processed by the depositories (i.e., upto the matching obligation quantity).'
NEW QUESTION # 191
In the context of the settlement of securities for sale transactions, specifically regarding the 'Demat Debit and Pledge Instruction' (DDPI), which of the following statements accurately defines the scope of authorization given by the client to the stock broker?
- A. It allows the broker to pledge the client's securities with a Non-Banking Financial Company (NBFC) to raise working capital for the brokerage firm.
- B. It authorizes the broker to transfer securities for off-market trades between unrelated parties to settle personal debts of the client.
- C. It explicitly authorizes the broker to access the client's beneficial owner account for the limited purpose of transferring securities to the broker's pool account to meet pay-in obligations.
- D. It grants full power of attorney to the broker to buy and sell securities without specific trade instructions from the client.
- E. It is a mandatory requirement for opening a demat account and cannot be revoked by the client under any circumstances.
Answer: C
Explanation:
Clients can give 'Demat Debit and Pledge Instruction' (DDPI) under which they explicitly agree to authorize the stock broker/stock broker and depository participant to access their BO account for the limited purpose for transferring securities from their individual demat account to brokers pool account for the purpose of meeting their pay-in obligation. This serves to mitigate the misuse associated with the broader Power of Attorney (PoA),.
NEW QUESTION # 192
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