[Mar-2026] Download Real NISM NISM-Series-VII Exam Dumps Test Engine Exam Questions
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NEW QUESTION # 55
SEBI has issued guidelines regarding the discontinuation of usage of pool accounts for transactions in units of Mutual Funds on Stock Exchange Platforms. Under this framework, which of the following practices is explicitly **PERMITTED** as an exception to the general rule against routing units through pool accounts?
- A. Crediting subscription units to the broker's pool account for reconciliation before transferring to the client.
- B. Holding non-demat units in a 'Client Unpaid Securities Account' if the client defaults on the subscription payment.
- C. Issuance of Delivery Instruction Slip (DIS) to the Depository Participant to debit units held in dematerialized mode for delivery to the Clearing Corporation during redemption.
- D. Pooling of redemption proceeds in the broker's settlement account for deduction of statutory levies before payout to the client.
- E. Routing funds for subscription through the broker's clearing bank account for clients availing margin trading facilities.
Answer: C
Explanation:
SEBI has advised that pooling of funds/units by stock brokers shall be discontinued. However, for redemption of units held in dematerialized mode, the practice of issuance of Delivery Instruction Slip ('DIS') (physical or electronic) to the Depository Participant to debit the units for delivery to clearing corporation may continue.
NEW QUESTION # 56
Stock Exchanges are required to maintain Investor Service Centres (ISCs) to assist investors. Which of the following facilities is mandatorily required to be provided at all ISCS according to SEBI guidelines?
- A. A library containing all annual reports of listed companies for the last 10 years.
- B. Arbitration and appellate arbitration facility including video-calling facility.
- C. A dedicated legal aid clinic with free lawyers for filing civil suits.
- D. A banking counter for immediate disbursement of Investor Protection Fund claims.
- E. A direct hotline to the Ministry of Finance.
Answer: B
Explanation:
SEBI has advised Exchanges to provide certain minimum facilities in ISCs, which includes arbitration and appellate arbitration facility at all ISCS including video-calling facility to investors for attending their online arbitration or Grievance Redressal meetings.
NEW QUESTION # 57
Which specific regulation defines a 'Clearing Corporation' as an entity established to undertake the activity of clearing and settlement of trades in securities or other instruments dealt on a recognized stock exchange?
- A. Depositories Act, 1996
- B. SEBI (Stock Brokers) Regulations, 1992
- C. SEBI (Intermediaries) Regulations, 2008
- D. Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018
- E. Securities Contracts (Regulation) Rules, 1957
Answer: D
Explanation:
The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 defines a Clearing Corporation as an entity established to undertake the activity of clearing and settlement of trades in securities or other instruments or products that are dealt with or traded on a recognized stock exchange.
NEW QUESTION # 58
Which of the following statements correctly reflect the regulatory framework and operational guidelines for the trading of Mutual Fund units on Stock Exchange Platforms? (Select all that apply)
- A. Funds pay-in is directly received by the clearing corporation from the investor account and funds pay-out is directly made to the investor account.
- B. Stock brokers are permitted to pool funds in a specific 'Mutual Fund Nodal Account' before transferring to the Clearing Corporation.
- C. For both demat and non-demat mode transactions, units shall be credited/debited directly to/from the investors' account without routing through the broker's pool account.
- D. Only stock brokers can access the Exchange platform for Mutual Funds; Mutual Fund Distributors are explicitly excluded.
- E. Asset Management Companies (AMCs) must enter into an agreement with the Exchange/Clearing Corporation to provide this mechanism.
Answer: A,C,E
Explanation:
StatementA is correct. Statement B is correct. Statement D is correct. Statement C is incorrect as pooling of funds is discontinued. Statement E is incorrect as Mutual Fund Distributors registered with AMFI who are permitted by the stock exchanges can also participate.
NEW QUESTION # 59
The Clearing Corporation performs three main functions: clearing, settlement, and risk management. Which of the following statements accurately defines the specific scope of the 'clearing' function?
- A. It involves the handling of exceptional situations like auction settlement and bad delivery.
- B. It is the two-way process which involves the actual transfer of funds and securities on the settlement date.
- C. It is the mechanism of linking multiple depositories to facilitate inter-depository transfers.
- D. It is the process designed to work out what members are due to deliver and what members are due to receive on the settlement date.
- E. It is the process of collecting margins and maintaining the Core Settlement Guarantee Fund.
Answer: D
Explanation:
The clearing function of the clearing corporation is specifically designed to work out (a) what members are due to deliver and (b) what members are due to receive on the settlement date. This determination of obligations is distinct from 'settlement', which involves the actual transfer of funds and securities.
NEW QUESTION # 60
Under the 'Framework for Adoption of Cloud Services by SEBI Regulated Entities (REs)', which of the following statements correctly describes the permissibility of different cloud deployment models?
- A. Public cloud is strictly prohibited for all SEBI Regulated Entities due to data localization concerns.
- B. RES are mandated to use only Community Cloud models hosted within the International Financial Services Centres (IFSC).
- C. Community cloud models are treated as 'other cloud models' and are currently prohibited unless explicitly permitted.
- D. Private cloud is considered an on-premise deployment and is governed by general SEBI circulars (cyber security, outsourcing) rather than the specific cloud framework.
- E. Hybrid cloud deployments are prohibited as they combine public and private clouds, creating security vulnerabilities.
Answer: D
Explanation:
The framework clarifies that a Private Cloud shall be considered as an on-premise deployment and consequently, private cloud deployments shall be governed by SEBI circulars (e.g., cyber security, outsourcing, BCP-DR) issued from time to time, and may not be governed by the specific cloud framework. Public, Community, and Hybrid clouds are permitted subject to conditions.
NEW QUESTION # 61
Under the 'Segregation and Monitoring of Collateral at Client Level' norms, how is the collateral allocated to a client utilized by the Clearing Corporation?
- A. It is used to cover the margin obligation of that specific client only.
- B. It is primarily used for the client but can be used for the TM's proprietary obligations in case of a shortfall.
- C. It is transferred to the Core Settlement Guarantee Fund immediately upon receipt.
- D. It is pooled with other clients' collateral to cover the aggregate margin requirement of the Trading Member.
- E. It is used to provide exposure limits to the Clearing Member's other Trading Members.
Answer: A
Explanation:
The CCs provide a facility for upfront segment-wise allocation of collateral. The CCs use such collateral allocation information to ensure that the collateral allocated to a client is used towards the margin obligation of that client only.
NEW QUESTION # 62
Which of the following statements accurately reflect the operational requirements and functions of Clearing Members and Custodians in the Clearing Process? (Select all that apply)
- A. It is mandatory for clearing members to open demat accounts with both depositories (CDSL and NSDL) known as clearing member settlement pool accounts.
- B. Clearing Members can withdraw funds from their designated clearing bank account in favor of third-party vendors for operational expenses.
- C. Custodians are required to confirm whether they will settle a trade assigned to them; if they fail to confirm, the onus of settlement falls on the executing trading member.
- D. Clearing Members act as the legal counterparty to all trades through the process of novation, replacing the Clearing Corporation.
- E. Clearing Members must maintain a separate and distinct clearing bank account with a designated clearing bank.
Answer: A,C,E
Explanation:
Statement A is correct ('mandatory for clearing members to open demat accounts with both the depositories'). Statement B is correct ('The custodian is required to confirm... In case the custodian fails to confirm then the onus of settling the trade falls on the trading member'). Statement E is correct ('mandatory for clearing member to open separate and distinct clearing bank account'). Statement C is incorrect because withdrawals are only allowed in 'self-name'. Statement D is incorrect because the *Clearing Corporation* acts as the legal counterparty through novation, not the Clearing Member.
NEW QUESTION # 63
Regarding the 'Block Mechanism in demat account of clients undertaking sale transactions', what happens if the sale transaction is not executed or is unmatched?
- A. The shares remain blocked until the payout date of the next settlement cycle.
- B. The shares are auctioned by the Clearing Corporation to recover the blockage fees.
- C. The Clearing Corporation uploads cancellation of Block instruction on T day, and securities are unblocked and become free in the client's demat account on T day itself.
- D. The client must manually submit an unblocking request to the Depository Participant on T+1 day.
- E. The shares are transferred to the Clearing Member's pool account and then returned to the client.
Answer: C
Explanation:
In case of unmatched orders, CCs shall upload cancellation of Block instruction on T day so that securities are unblocked and become free in client's demat account on T day itself. If the sale is not executed, shares shall continue to remain in the client's demat account and will be unblocked at the end of the T day.
NEW QUESTION # 64
While institutional trades generally do not attract upfront margins, specific categories of institutional investors are subject to upfront margining similar to non-institutional trades. Identify the category from the list below.
- A. Public Financial Institutions defined under the Companies Act
- B. Insurance Companies registered with IRDAI
- C. Mutual Funds registered with SEBI
- D. Category II FPIs who are corporate bodies, individuals, or family offices
- E. Category I Foreign Portfolio Investors (Sovereign Wealth Funds)
Answer: D
Explanation:
Trades of Category II FPIs who are corporate bodies, individuals, or family offices and domestic entities who may choose to settle trades through a Custodian shall be margined on an upfront basis as per the margining framework of non-institutional trades. Other institutional trades are margined on T+1 day subsequent to confirmation.
NEW QUESTION # 65
For stock brokers providing Algorithmic Trading facilities, SEBI has mandated specific controls and audit requirements. Which of the following combinations correctly specifies the server location requirement and the frequency of system audits?
- A. Server Location: Broker's registered office only; Audit Frequency: Every two years
- B. Server Location: Co-location facility only; Audit Frequency: Quarterly
- C. Server Location: India; Audit Frequency: Once at the time of approval
- D. Server Location: India; Audit Frequency: Every six months
- E. Server Location: Any global location; Audit Frequency: Annually
Answer: D
Explanation:
SEBI has advised stock exchanges to ensure that 'all algorithmic orders are necessarily routed through broker servers located in India'. Furthermore, 'The stock brokers that provide the facility of algorithmic trading shall subject their algorithmic trading system to a system audit every six months'.
NEW QUESTION # 66
Regarding the premium settlement for option contracts, at what level is the premium payable or receivable value computed by the Clearing Corporation?
- A. Netting at the Clearing Member level across all segments.
- B. Gross at the individual client level without any netting.
- C. After netting the premium payable or receivable positions at the Trading Member/Custodial Participant level for each option contract.
- D. Netting is done across all option contracts for a specific underlying security at the client level.
- E. Gross at the Trading Member level but netted at the Clearing Member level.
Answer: C
Explanation:
The source states that for premium settlement in respect of admitted deals in options contracts, the premium payable or receivable value of clearing members shall be computed after netting the premium payable or receivable positions at trading member/Custodial Participant level, for each option contract, at the end of each trading day.
NEW QUESTION # 67
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. Clients having arrangements with custodians registered with SEBI for clearing and settlement of trades.
- C. High Net Worth Individuals (HNIs) using Power of Attorney (POA) services.
- D. Retail investors using the electronic Delivery Instruction Slip (eDIS) facility.
- E. Non-Resident Indians (NRIs) trading through a designated stock broker.
Answer: B
Explanation:
The source explicitly mentions: 'This process shall not be applicable to clients having arrangements with custodians registered with SEBI for clearing and settlement of trades.'
NEW QUESTION # 68
Regarding the utilization of proceeds generated from an Auction or Close-out procedure, what is the regulatory requirement for handling any residual amount remaining after settling the claim of the aggrieved party?
- A. It must be credited to the Investor Protection Fund (IPF) of the Exchange.
- B. It is distributed equally among all non-defaulting clearing members.
- C. It is returned to the defaulting member after deducting a 1% processing fee.
- D. It is transferred to the SEBI General Fund.
- E. It should be credited to the Core Settlement Guarantee Fund (Core SGF).
Answer: E
Explanation:
The proceeds from Auction or Close-out should be used to settle the claim of the aggrieved party. Any amount remaining thereof should be credited to the Core Settlement Guarantee Fund ('Core SGF') instead of crediting it to the defaulting party's account.
NEW QUESTION # 69
According to SEBI guidelines regarding the corpus of the Investor Protection Fund (IPF), specific penalties collected by Stock Exchanges contribute to the fund. What is the prescribed quantum of penalty collected from Trading Members (TMs) for default in pay-in by an investor in an Offer For Sale (OFS) transaction that must be credited to the IPF?
- A. 10% of the order value
- B. 5% of the trade value
- C. 2% of the order value
- D. 1% of the trade value
- E. 20% of the shortage amount
Answer: A
Explanation:
The source explicitly lists the contributions to the IPF. One such contribution is: 'Penalty collected from TMs for default in pay-in by an investor in an Offer For Sale (OFS) transaction - 10% of the order value.'
NEW QUESTION # 70
Clearing Members are required to maintain specific demat accounts known as 'Clearing Member Settlement Pool Accounts' with depositories. Which of the following statements accurately describes the legal and operational nature of the securities held in these pool accounts?
- A. The Clearing Member does not get any ownership or beneficiary rights over the shares held in these accounts; they are strictly for settlement delivery and receipt.
- B. Securities in the pool account are automatically pledged to the Clearing Corporation as margin and cannot be delivered until unpledged.
- C. Corporate action benefits for securities held in the pool account are retained by the Clearing Member as operational fees.
- D. The Clearing Member obtains full ownership rights over the securities in the pool account to facilitate settlement.
- E. Clients cannot transfer shares directly into the Clearing Member's pool account; they must transfer to a beneficiary account first.
Answer: A
Explanation:
As per the study material, 'It should be noted that unlike the usual demat accounts, the clearing member does not get any ownership or beneficiary rights over the shares held in these accounts.' These accounts are used to deliver securities against pay-in obligations and receive pay-out of securities.
NEW QUESTION # 71
Under the SEBI (Prohibition of Insider Trading) Regulations, 2015, which of the following parties is deemed to be a 'Connected Person' unless the contrary is established?
- A. A vendor supplying office stationery on a one-off basis.
- B. A former employee who left the company 12 months prior to the act.
- C. A banker of the company.
- D. An individual who has never held a position in the company.
- E. A shareholder holding 5% interest in the company.
Answer: C
Explanation:
The regulations list categories of persons deemed to be 'Connected Persons'. This list includes a banker of the company. A former employee is a connected person if associated within 6 months prior to the act. A holding of more than 10% interest is required to be deemed connected. Therefore, a banker is the correct deemed connected person.
NEW QUESTION # 72
Apart from the primary clearing account, a Clearing Member is permitted to maintain an 'additional clearing account' with a designated clearing bank. For what specific operational purposes is this additional account utilized?
- A. For settlement of commodities derivatives trades only.
- B. For collecting brokerage and statutory levies from clients.
- C. For the purpose of enhancement of collateral in the form of cash and providing early pay-in of funds.
- D. For receiving dividend payments from listed companies on behalf of clients.
- E. For separating proprietary trading funds from client funds.
Answer: C
Explanation:
The regulations specify that a Clearing Member can maintain and operate an additional clearing account with a designated clearing bank specifically for the purpose of enhancement of collateral in the form of cash and providing early pay-in of funds.
NEW QUESTION # 73
Regarding the modernization of broker services, what specific technological facility allows brokers to offer clients direct control over orders, faster execution, and reduced risk of manual errors?
- A. Direct Market Access (DMA)
- B. Physical Delivery Instruction Slip (PDIS)
- C. Offline Trading System (OTS)
- D. Manual Order Routing (MOR)
- E. Contract Note Digitization (CND)
Answer: A
Explanation:
Direct Market Access (DMA) is listed as a facility offered by a stock broker's outlet. While the definition is in later sections, the introduction lists it as a key facility provided by brokers.
NEW QUESTION # 74
Under the SEBI guidelines regarding the monitoring of unauthenticated news by market intermediaries, what is the mandatory protocol for an employee who receives market-related news via their personal mail or blog?
- A. The employee must verify the accuracy of the news with at least two independent sources before forwarding.
- B. The employee must report the sender of the news to the Financial Intelligence Unit (FIIJ) within 24 hours.
- C. The employee should forward the news to clients immediately with a disclaimer stating it is unverified.
- D. The employee is strictly prohibited from accessing personal mail or blogs on office premises.
- E. The news should be forwarded only after the same has been seen and approved by the Compliance Officer.
Answer: E
Explanation:
The guidelines state: 'Employees should be directed that any market related news received by them either in their official mail/personal mail/blog or in any other manner, should be forwarded only after the same has been seen and approved by the Compliance Officer of the concerned Intermediaries.'
NEW QUESTION # 75
Which of the following statements correctly describe the logic for blocking margins from collateral for different types of trades under the client collateral segregation framework? (Select all that apply)
- A. For a trade from a client account, if client collateral is insufficient, the residual margin is blocked from the TM proprietary collateral.
- B. For a trade from the proprietary account of a TM, margin is first blocked from the TM proprietary collateral, and if insufficient, from the CM proprietary collateral.
- C. Margins based on trades from the proprietary account of the CM are blocked from the proprietary collateral of the CM only.
- D. For a client trade, if TM proprietary collateral is insufficient, the residual margin is blocked from the collateral of other clients of the same TM.
- E. If a CM'S proprietary collateral is insufficient for a TM's proprietary trade, the CC utilizes the Core SGF immediately.
Answer: A,B,C
Explanation:
Statement A is correct: Client trade margin logic is Client Collateral -> TM Prop -> CM Prop. Statement B is correct: TM Prop trade margin logic is TM Prop CM Prop. Statement C is correct: CM Prop trade margin logic is CM Prop only. Statement D is incorrect because client collateral is segregated and cannot be used for other clients or prop trades. Statement E is incorrect as it refers to the default waterfall, not the initial blocking logic.
NEW QUESTION # 76
When implementing the recommended Web Interfaces and Protocols between a Trading Web Server and Trading Client Terminals for IBT, which technical standards are suggested for adoption?
- A. FTP Ver 2 or above and SMTP
- B. POP3 and IMAP protocols
- C. HTTP Ver 4 or above and HTML Ver 4/XML
- D. WAP 1.0 and WML only
- E. Telnet and Gopher protocols
Answer: C
Explanation:
Between a Trading Web Server and Trading Client Terminals, Interfaces Standards as per recommendations of IETF (Internet Engineering Task Force) and W3C (World Wide Web Consortium) may be adopted. E.g.: HTTP Ver 4 or above HTML Ver 4/XML.
NEW QUESTION # 77
Regarding the 'Direct Pay-out' of securities mandated by SEBI vide circular dated June 05, 2024, which of the following operational changes has been implemented concerning the credit of securities and the settlement timing?
- A. Direct pay-out is applicable only for Institutional Clients, while Retail Clients continue to receive shares via the Broker's Pool Account.
- B. The pay-out timing remains 1 PM, but the securities are credited to the client's account on T+2 day instead of T+1.
- C. Securities are credited to a temporary 'Client Unpaid Securities Account' maintained by the Clearing Corporation until funds are cleared.
- D. Securities are credited to the Broker's Pool Account by 1 PM, and the broker must transfer them to the client by 3:30 PM on the same day.
- E. Securities are credited directly to the client's demat account by the Clearing Corporation, and the pay-out timing is revised from 1 PM to 3:30 PM.
Answer: E
Explanation:
As a consequence of the mandate for securities for pay-out to be credited directly to the respective client's demat account by the Clearing Corporations, the timing of the payout of securities shall be revised from 1 PM to 3:30 PM. As a result, securities shall be credited to the clients' demat account on the same settlement day.
NEW QUESTION # 78
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