Free Sales Ending Soon - 100% Valid NISM-Series-VII Exam Dumps with 334 Questions
Verified NISM-Series-VII dumps Q&As on your National Institute of Securities Markets Exam Questions Certain Success!
NEW QUESTION # 139
Identify the trading sessions or mechanisms that are explicitly NOT applicable under the T+0 settlement cycle. (Select all that apply)
- A. Post Close Session
- B. Pre-open Session
- C. Continuous Trading Session
- D. Early Pay-in via Block Mechanism
- E. Auction Session
Answer: A,B,E
Explanation:
According to the source, 'Pre-open, Special Pre-open, Block window, Auction, Periodic call auction and Post close session are not applicable under T+0 settlement.' Note: While a later circular advised facilitating a block deal window, the core exclusions listed include Pre-Open, Auction, and Post Close. Continuous Trading and Early Pay-in are applicable features.
NEW QUESTION # 140
In the context of Back Office Operations, specifically regarding 'Trade Enrichment', which of the following best describes the process that occurs automatically after trade execution to prepare for clearing and settlement?
- A. The automatic appending of brokerage rates, GST, stamp duty, and Securities Transaction Tax (STT) to the raw trade data.
- B. The netting of buy and sell positions to determine the final open position for the purpose of margin calculation.
- C. The generation of a unique client code (IJCC) and mapping it to the client's PAN before the order is routed to the exchange.
- D. The splitting of a single institutional order into multiple sub-accounts based on deal sheets provided by the front office.
- E. The manual verification of the 'INST' Custodial Participant code against the clearing member's exposure limits.
Answer: A
Explanation:
Trade Enrichment is defined as the process performed automatically after each trade execution where additional information is included in the trade instruction. The back-office systems maintain masters relating to brokerage rates, GST, stamp duty, and STT charge tables. When trade data is uploaded, this information is appended to every trade to arrive at client-wise brokerage, obligations, and tax amounts.
NEW QUESTION # 141
According to the SEBI (Prohibition of Insider Trading) Regulations, 2015, certain categories of persons are 'deemed to be connected persons' unless the contrary is established. Which of the following entities fall under this 'deemed' category?
- A. A person who has been associated with the company in any capacity 8 months prior to the trade.
- B. A concern, firm, or HUF wherein a director of the company has more than 10% of the holding of interest.
- C. A banker of the company.
- D. A holding company or subsidiary company of the listed entity.
- E. An official of a stock exchange or clearing corporation.
Answer: B,C,D,E
Explanation:
The regulations list several categories of 'deemed connected persons' including holding/subsidiary companies, bankers, officials of stock exchanges/clearing corporations, and concerns where a director has >10% interest. Option E is incorrect because the definition of a connected person includes association during the six months prior to the concerned act, not eight months,.
NEW QUESTION # 142
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 involves electronically capturing and processing transactions in one pass, from the point of first 'deal' to final settlement, avoiding manual re-entry.
- C. It is a mechanism for retail clients to directly settle trades with the Clearing Corporation.
- D. It refers to the process of auctioning securities in case of delivery shortages.
- E. It is a manual process of verifying contract notes against trade logs to ensure accuracy.
Answer: B
Explanation:
STP is defined as 'electronically capturing and processing transactions in one pass, from the point of first deal' to final settlement'. It involves the use of a single system to process elements of the workflow, streamlining trade execution and settlement and avoiding manual entry/re-entry.
NEW QUESTION # 143
Which of the following statements correctly describe the operational framework for the settlement of institutional transactions in the Cash Segment? (Select all that apply)
- A. It is mandatory for all institutional trades to be processed through the Straight Through Processing (STP) system.
- B. The Custodial Participant (CP) Code must be entered at the time of order entry.
- C. The custodian settles their deliveries on a gross basis with the stock exchanges.
- D. Institutional investors are permitted to square off their transactions intra-day (Day Trading).
- E. All transactions are grossed for institutional investors at the custodian level for obligation fulfillment.
Answer: A,B,E
Explanation:
Statement A is correct (Mandatory STP). Statement C is correct (Transactions grossed at custodian level for investor obligation). Statement E is correct (Mandatory CP code at order entry). Statement B is incorrect (Day trading prohibited). Statement D is incorrect because the custodian continues to settle their deliveries on a *net basis* with the stock exchanges/clearing corporation, even though the client obligation is gross.
NEW QUESTION # 144
Why are Institutional Investors (including Foreign Portfolio Investors) explicitly excluded from the mechanism of Net Settlement of cash segment and physical settlement of F&O segment upon expiry?
- A. Because they are subject to different tax treaties which prevent segment-wise netting.
- B. Because they trade through Custodians who do not have clearing rights in the F&O segment.
- C. Because their trading volumes are too high to be accommodated in a net settlement process.
- D. Because they are not required to pay margins in the F&O segment.
- E. Because the extant regulatory framework specifies that all transactions by institutional investors in the cash market should be backed by delivery.
Answer: E
Explanation:
Netting of settlement obligations of cash segment and physical settlement of F&O segment shall not be available for the institutional investors (including all categories of FPIs) since the extant regulatory framework specifies that all transactions by the institutional investors (including all categories of Foreign Portfolio Investors) in cash market should be backed by delivery.
NEW QUESTION # 145
For Securities Trading using Wireless Technology (STWT), specific operational and security controls are mandated to prevent misuse and ensure compliance. Which of the following statements regarding 'Session Login Details' and 'Server Location' is CORRECT?
- A. Session login details can be stored if biometric auth is enabled; The server must be located in a Tier-1 city.
- B. Session login details should not be stored; The server location is at the discretion of the service provider.
- C. Session login details should not be stored on the devices; The broker's server routing orders to the exchange trading system shall be located in India.
- D. Session login details must be encrypted and stored on the device; The server must be located within the Exchange premises.
- E. Session login details can be stored on the device for ease of access; The server can be located anywhere globally.
Answer: C
Explanation:
The guidelines specify that Session login details should not be stored on the devices used for internet-based trading and securities trading using wireless technology. Furthermore, The broker's server routing orders to the exchange trading system shall be located in India.
NEW QUESTION # 146
Which of the following statements correctly reflect the general responsibilities and investment restrictions imposed on a Portfolio Manager by SEBI? (Select all that apply)
- A. The portfolio manager is permitted to lend securities held on behalf of clients to third parties to generate extra income without restriction.
- B. Portfolio Managers may invest in units of Mutual Funds only through the direct plan.
- C. The portfolio manager shall segregate each client's holding in securities in separate accounts.
- D. The discretionary portfolio manager can deploy client funds in bill discounting if authorized by the client.
- E. The portfolio manager shall not borrow funds or securities on behalf of the client.
Answer: B,C,E
Explanation:
Option A is correct: 'The portfolio manager shall not borrow funds or securities on behalf of the client.' Option C is correct: 'Portfolio Managers may invest in units of Mutual Funds only through direct plan.' Option D is correct: 'shall segregate each client's holding in securities in separate accounts.' Option B is incorrect as lending is generally prohibited except as provided under regulation. Option E is incorrect as deploying funds in bill discounting is prohibited.
NEW QUESTION # 147
Regarding the 'Default Waterfall' in the context of the Net Settlement mechanism for Cash and F&O segments, which of the following statements is correct?
- A. Clearing Corporations continue to maintain segment-wise default waterfalls, and losses are computed on the basis of segment-wise obligations on a pro-rata basis.
- B. Clearing Corporations create a unified single default waterfall covering both segments to match the merged settlement.
- C. Default losses are covered solely by the Investor Protection Fund (IPF) in the case of net settlement defaults.
- D. The Core Settlement Guarantee Fund (SGF) of the F&O segment is utilized first for any default arising from the net settlement obligation.
- E. The default waterfall is triggered only after liquidating the defaulting member's proprietary assets across all exchanges.
Answer: A
Explanation:
Clearing Corporations (CCs) shall continue to settle obligations on a net basis at the CM level. Further, CCs shall continue to maintain segment-wise default waterfalls, regardless of a single settlement across segments. The losses, if any, in case of default of a CM to CC shall be computed on the basis of the segment-wise obligation of CM to CC, on a pro-rata basis.
NEW QUESTION # 148
When a stock broker's collateral utilization breaches the specific percentage (currently 90%), the 'Risk Reduction Mode' is triggered. Which of the following operational restrictions and conditions apply during this mode? (Select all that apply)
- A. Non-margined orders are accepted without restriction to maintain liquidity.
- B. Fresh orders placed by the member to reduce the open position will be accepted.
- C. Client and Custodial Participant code modification is permitted to rectify errors.
- D. Only orders with 'Immediate or Cancel' (IOC) attribute are permitted.
- E. All unexecuted orders shall be cancelled immediately.
Answer: B,D,E
Explanation:
In Risk Reduction Mode: 1) All unexecuted orders shall be cancelled. 2) Only orders with Immediate or Cancel attribute shall be permitted. 3) Fresh order placed by member to reduce the open position will be accepted. Option D is incorrect because non-margined orders shall *not* be accepted. Option E is incorrect because Client and Custodial Participant code modification shall *not* be permitted.
NEW QUESTION # 149
The secondary market operates through different mediums with distinct settlement mechanisms. Which of the following statements accurately differentiates the Over-The-Counter (OTC) market from the Exchange Traded Market?
- A. OTC markets use a centralized Clearing Corporation to guarantee all trades.
- B. Exchange Traded Markets do not adhere to a fixed time schedule for settlement.
- C. OTC markets are informal markets where trades are negotiated and settled bilaterally.
- D. OTC markets consist of standardized contracts traded on a screen-based system.
- E. Exchange Traded Markets allow buyers and sellers to know each other's identity directly.
Answer: C
Explanation:
The source states that OTC markets are informal markets where trades are negotiated, traded over the counter, and settled bilaterally. In contrast, the Exchange Traded Market uses a Clearing Corporation which acts as a counterparty and guarantees settlement, and buyers and sellers do not know each other.
NEW QUESTION # 150
Under the framework for validation of instructions for Pay-In of securities, which of the following scenarios results in the immediate rejection of the transfer instruction by the Depositories?
- A. When the instruction is received on T+1 day instead of T day.
- B. When the quantity in the instruction is exactly equal to the obligation provided by the Clearing Corporation.
- C. When the quantity in the instruction is less than the obligation provided by the Clearing Corporation.
- D. When there are discrepancies in details like UCC, TM ID, CM ID, or ISIN between the instruction and the obligation data.
- E. When the instruction is initiated by a Power of Attorney (POA) holder instead of the client directly.
Answer: D
Explanation:
The source states that under 'Unmatched Instruction': 'In case of discrepancies in details like UCC, TM ID, CM ID, ISIN etc., between instruction and obligation, such transfer instructions will be rejected by the depositories.'
NEW QUESTION # 151
SEBI vide circular dated September 24, 2024, mandated the use of UPI for blocking funds for individual investors applying in public issues of debt securities up to Rs. 5 Lakh. However, a subsequent clarification dated October 18, 2024, permitted a specific alternative online submission method. What is this permitted alternative?
- A. Submission via physical ASBA forms at designated Self Certified Syndicate Banks (SCSBs).
- B. Submission through the General Ledger account of the Stock Broker.
- C. Submission via the dedicated mobile application of the Registrar and Transfer Agent.
- D. Submission using the facility of linked online trading, demat, and bank account (3-in-l type accounts).
- E. Direct transfer of funds to the issuer's escrow account via NEFT/RTGS.
Answer: D
Explanation:
The text states that 'investors may continue to submit the bid-cum application form online using the facility of linked online trading, demat and bank account (3-in-l type accounts) for making application in public issue of debt securities, non-convertible redeemable preference shares, municipal debt securities and securitised debt instruments.'
NEW QUESTION # 152
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 validate the accuracy of the software used for margin calculation.
- B. To determine the daily settlement price of illiquid futures contracts.
- C. To identify under which market conditions and scenarios the combination of margins, Core SGF, and other financial resources would prove insufficient.
- D. To test the operational capability of the backup disaster recovery site.
- E. To calculate the historical volatility of the most liquid securities over the past 5 years.
Answer: C
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 # 153
Regarding the facility provided by Clearing Corporations to Clearing Members for the pay-in of securities through NSDL/CDSL, which automated mechanism is available to streamline the process?
- A. Auto-pledge of client securities directly to the Clearing Corporation without broker intervention.
- B. Auto-borrowing of securities from the Securities Lending and Borrowing (SLB) platform to meet shortfalls.
- C. Delivery-out instructions generated automatically by the Clearing Corporation based on the net delivery obligations of its Clearing Members.
- D. Automatic conversion of physical shares to demat shares on the pay-in date.
- E. Automatic debit of the client's bank account for the value of securities short delivered.
Answer: C
Explanation:
For pay-in through NSDL/CDSL, the broker can avail of a facility wherein delivery-out instructions can be generated automatically by the Clearing Corporation based on the net delivery obligations of its Clearing Members.
NEW QUESTION # 154
Identify the financial instrument described by the following features: It is a rupee-denominated bond issued outside India by Indian entities to raise money in local currency from foreign investors.
- A. Global Depository Receipt (GDR)
- B. External Commercial Borrowing (ECB)
- C. American Depository Receipt (ADR)
- D. Masala Bond
- E. Foreign Currency Convertible Bond (FCCB)
Answer: D
Explanation:
Masala Bonds are rupee-denominated bonds issued outside India by Indian entities. They are debt instruments which help to raise money in local currency from foreign investors,.
NEW QUESTION # 155
Under the Online Dispute Resolution (ODR) framework, if a Market Participant wishes to initiate dispute resolution against an investor/client through the ODR Portal, which of the following procedural pre-requisites must be strictly fulfilled?
- A. The Market Participant must wait for a mandatory cooling-off period of 60 days from the date of the transaction.
- B. The Market Participant must deposit 50% of the disputed amount with the Stock Exchange.
- C. The Market Participant can only initiate ODR if the claim value exceeds Rs. 10 Lakhs.
- D. The Market Participant must give due notice of at least 15 calendar days to the investor/client for resolution of the dispute.
- E. The Market Participant must obtain a 'No Objection Certificate' from SEBI.
Answer: D
Explanation:
According to the source, 'The concerned Market Participant may also initiate dispute resolution through the ODR Portal after having given due notice of at least 15 calendar days to the investor/client for resolution of the dispute which has not been satisfactorily resolved between them'.
NEW QUESTION # 156
Regarding Indian Depository Receipts (IDRs) and the regulatory framework for their conversion or redemption into underlying equity shares, which of the following statements accurately reflects the permissible conditions?
- A. Two-way fungibility is strictly prohibited; investors can only convert underlying shares into IDRs but cannot redeem IDRs into shares.
- B. The headroom for conversion is calculated based on the total paid-up capital of the issuing company rather than the specific number of IDRs issued.
- C. Redemption is permitted after 1 year from the date of listing, subject to available headroom calculated as originally issued IDRs minus outstanding IDRs adjusted for redemptions.
- D. Redemption is permitted immediately upon listing, provided the fungibility is restricted to one-way conversion from IDRs to shares only.
- E. Investors can request redemption into underlying shares at any time, but the underlying shares must be held by a domestic custodian registered with SEBI.
Answer: C
Explanation:
The regulations for IDRs state that 'Redemption/Conversion is permitted after 1 year from the date of listing of the IDRs.' Furthermore, 'Two way fungibility of IDRs is permitted... However, the number of shares that can be converted into depository receipt should be within the headroom available.' The headroom is defined as 'the number of IDRs originally issued minus the number of IDRs outstanding, which is further adjusted for IDRs redeemed into underlying equity shares.'
NEW QUESTION # 157
Regarding the maintenance and preservation of books of account and other records by stock brokers, which of the following statements accurately reflects the regulatory requirements under the Securities Contracts (Regulation) Rules, 1957 (SCRR) and SEBI Regulations?
- A. Books must be preserved for 3 years; seized originals need not be tracked once handed over to agencies.
- B. Books must be maintained in physical form only for a minimum of 5 years; electronic records are optional.
- C. Books must be preserved for 10 years if the broker is involved in algorithmic trading.
- D. Books must be preserved for 5 years; if originals are seized by an enforcement agency, they must be preserved (originals or copies) until the trial is completed.
- E. Books must be preserved for 8 years in alignment with the Companies Act, regardless of SEBI regulations.
Answer: D
Explanation:
As per Regulation 18 of the Stock Brokers Regulations 1992 and SCRR 1957, every stock broker shall preserve the specified books of account for a minimum period of five years. Furthermore, it is advised to preserve the originals (or copies if originals are taken) of documents taken by enforcement agencies during an investigation till the trial is completed.
NEW QUESTION # 158
In the context of Interest Rate Derivatives traded on Indian exchanges, specifically for single bond futures on Government of India (GOI) securities, how is the final settlement price determined if the liquidity criteria in the underlying bond are not met during the last two hours of trading?
- A. It is the simple average of the best bid and ask prices available on the NDS-OM platform at 5:00 PM.
- B. It is calculated based on the Value Weighted Average Price (VWAP) of the underlying bond executed during the last 30 minutes of trading on the NDS-OM platform.
- C. If less than 5 trades are executed in the underlying bond during the last two hours, the FIMMDA/FBIL price shall be used.
- D. It is derived from the theoretical price formula: Cash Price + Financing Cost - Income on cash position.
- E. It is based on the polling of prices from the top 5 Primary Dealers if less than 10 trades are executed on the exchange.
Answer: C
Explanation:
According to the product specifications for Interest Rate Derivatives, the final settlement price for single bond futures is the value weighted average price of the underlying bond based on prices during the last two hours of trading on NDS-OM. However, a specific fallback exists: 'If less than 5 trades are executed in the underlying bond during the last two hours of trading, then FIMMDA/FBIL price shall be used for final settlement.'
NEW QUESTION # 159
......
NISM-Series-VII Exam Dumps - 100% Marks In NISM-Series-VII Exam: https://www.torrentexam.com/NISM-Series-VII-exam-latest-torrent.html
Exam Dumps Use Real National Institute of Securities Markets Dumps With 334 Questions: https://drive.google.com/open?id=1LKuZigdZlvdwoEY9M2Kf5BgOZ4ZkYSAX
