NISM Series VII - Securities Operations and Risk Management Certification Sample Questions:

1. Straight Through Processing (STP) is mandated for institutional trades. Which of the following best describes the operational benefit and definition of STP in the securities trade life cycle?

A) It is a risk management tool used exclusively by the Front Office to block erroneous orders before they reach the exchange.
B) It refers to the process of auctioning securities in case of delivery shortages.
C) It is a manual process of verifying contract notes against trade logs to ensure accuracy.
D) It is a mechanism for retail clients to directly settle trades with the Clearing Corporation.
E) It involves electronically capturing and processing transactions in one pass, from the point of first 'deal' to final settlement, avoiding manual re-entry.

2. 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) A minimum of 51% of capital must be held by a designated clearing bank.
B) All partners must hold NISM Series-VII certification.
C) The firm must maintain a static profit-sharing ratio for 5 years.
D) The firm must convert to a Limited Liability Partnership within 1 year.
E) The applicant must identify a Dominant Promoter Group.

3. Under the 'Direct Pay-out' of securities framework mandated by SEBI, to which category of clients is this facility not applicable?

A) Clients having arrangements with custodians registered with SEBI for clearing and settlement
B) Qualified Stock Brokers' proprietary trading accounts
C) High Net-worth Individuals (HNls)
D) Non-Resident Indians (NRIs) dealing through a Portfolio Investment Scheme (PIS)
E) Retail Individual Investors

4. Regarding the operational obligations of a Portfolio Manager, which of the following statements regarding the maintenance of books, audit, and reporting to clients is legally accurate?

A) Books of account must be audited yearly, and a report furnished to the client not exceeding a period of three months.
B) Books of account must be preserved for 3 years, and reports furnished to clients annually.
C) The portfolio manager is not required to appoint a custodian if they provide discretionary services.
D) Audit of books is optional for non-discretionary portfolio managers.
E) Books of account must be audited every quarter, and reports furnished to clients every month.

5. The mechanism for the validation of instructions for Pay-In of securities from a client demat account to a Member Pool Account is explicitly NOT applicable to which category of clients?

A) Corporate clients trading in the derivatives segment only.
B) Non-Resident Indians (NRIs) trading through a designated stock broker.
C) High Net Worth Individuals (HNIs) using Power of Attorney (POA) services.
D) Retail investors using the electronic Delivery Instruction Slip (eDIS) facility.
E) Clients having arrangements with custodians registered with SEBI for clearing and settlement of trades.

Solutions: