Latest [Sep 17, 2026] NISM-Series-VII Exam with Accurate NISM Series VII - Securities Operations and Risk Management Certification PDF Questions
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NEW QUESTION # 35
Which of the following statements accurately reflect the operational rules and fee structures of the Online Dispute Resolution (ODR) mechanism? (Select all that apply)
- A. If a Market Participant initiates the dispute resolution process, the fees shall be borne by the MIIs and not the Market Participant.
- B. For claims of Rs 1 or below, the Sole Arbitrator shall conduct a document-only arbitration process unless a hearing is specifically granted.
- C. Initiation of the conciliation process after six months from the date of the dispute requires payment of a late fee of Rs 1 ,000 by the initiator.
- D. The ODR Portal allocates disputes to ODR Institutions based on a competitive bidding system for fees.
- E. The Market Participant is strictly prohibited from shifting the incidence of fees and charges to the investor/client.
Answer: B,C,E
Explanation:
Option A is correct: 'The Market Participant shall not shift the incidence of such fees to the investor/client at any time'. Option B is correct: 'Initiation of conciliation process after six months... will require payment of Rs 1000/- by the initiator'. Option C is correct: When the value of claim... is Rs 1 or below... Sole Arbitrator shall conduct a document-only arbitration process'. Option D is incorrect as allocation is via a 'round-robin system'. Option E is incorrect as fees are borne directly by the Market Participant if it is initiating the process.
NEW QUESTION # 36
Which of the following facilities are normally offered by a stock broker's outlet as part of their diversified services? (Select all that apply)
- A. Issuance of Indian Currency
- B. Margin funding
- C. Internet-based Online Trading (IBT)
- D. Mobile trading & Smart Order Routing (SOR)
- E. Investment advice & Research reports
Answer: B,C,D,E
Explanation:
The text explicitly lists the following facilities offered by a stock broker's outlet: 'Investment advice & Research reports', 'Margin funding', 'Mobile trading & Smart Order Routing (SOR)', and 'Internet-based Online Trading (IBT)'. Option D is incorrect.
NEW QUESTION # 37
Stock brokers are required to report specific transactions to the Financial Intelligence Unit - India (FIU-IND) under the Prevention of Money Laundering Act. Which of the following combinations correctly specifies the submission timelines for the Cash Transaction Report (CTR), Suspicious Transaction Report (STR), and Non-Profit Organization Transaction Report (NTR)?
- A. CTR: By 15th of succeeding month; STR: Within 7 days of arriving at a conclusion; NTR: By 15th of succeeding month.
- B. CTR: By 7th of succeeding month; STR: Within 3 days of conclusion; NTR: By 7th of succeeding month.
- C. CTR: By 1 5th of succeeding month; STR: Within 24 hours of conclusion; NTR: By 30th of succeeding month.
- D. CTR: By 10th of succeeding month; STR: Within 7 days of occurrence; NTR: By 10th of succeeding month.
- E. CTR: By end of the quarter; STR: Within 15 days of conclusion; NTR: By end of the quarter.
Answer: A
Explanation:
The Cash Transaction Report (CTR) for each month shall be submitted to FIU-IND by the 15th of the succeeding month. The Suspicious Transaction Report (STR) shall be submitted within 7 days of arriving at a conclusion that any transaction is of suspicious nature. The Non-Profit Organization Transaction Reports (NTRs) for each month shall be submitted to FIU-IND by the 15th of the succeeding month.
NEW QUESTION # 38
A securities broking firm configures its Compliance Management System (CMS) to manage data retention policies in accordance with the Prevention of Money-Laundering Act (PMLA), 2002.
Review the JSON configuration snippet below regarding record retention timelines:
Based on the SEBI directives and PMLA provisions, which setting in the configuration is legally NON-COMPLIANT?
- A. suspicious_transaction_reports: 5_years_from_reporting_date
- B. Both transaction_records and suspicious_transaction_reports
- C. client_identity_documents: 3_years_from_account_closure
- D. transaction_records: 5_years_from_transaction_date
- E. All settings are compliant
Answer: C
Explanation:
According to Section 12 of the PMLA, 2002, reporting entities must maintain records of documents evidencing the identity of clients and beneficial owners (e.g., account files, business correspondence) for a period of five years after the business relationship has ended or the account has been closed, whichever is later. The configuration setting of '3 years' is non-compliant.
NEW QUESTION # 39
In the event of a failure by a selling broker to deliver securities in the normal T+1 rolling settlement, the Clearing Corporation initiates a
'Close Out' procedure if the auction fails or is not applicable. Consider a scenario where a trade was executed on Monday (T) at Rs. 500.
The auction was scheduled for Tuesday (T+1 ) but no shares were offered. The highest price prevailing across the Exchange from Monday to Tuesday was Rs. 540. The official closing price on Tuesday (Close-out day) was Rs. 550. At what price will the transaction be closed out?
- A. Rs. 660 (20% above the official closing price on the close out day)
- B. Rs. 648 (20% above the highest prevailing price)
- C. Rs. 540 (Highest price from T to Close-out day)
- D. Rs. 600 (Highest price + 20% penalty)
- E. Rs. 550 (Official closing price on Close-out day)
Answer: A
Explanation:
According to the Close Out Procedure, the deal will be closed out at the highest price prevailing across the Exchange from the day on which the trade was originally executed till the day of closing out OR 20 percent over the official closing price on the close out day, whichever is HIGHER. Calculation: Highest Price = Rs. 540.20% over Closing Price on Close out day = 550 + (20% of 550) = 550 + 110 = Rs. 660. Since 660 > 540, the close out price is Rs. 660.
NEW QUESTION # 40
For the purpose of corporate action adjustments in the Equity F&O segment, under what specific condition is a dividend deemed to be 'extra-ordinary', thereby necessitating an adjustment to the futures and options contracts?
- A. If the dividend amount exceeds 10% of the closing price of the scrip on the record date.
- B. If the dividend yield exceeds the risk-free interest rate (MIBOR) prevailing on the declaration date.
- C. If the dividend amount is at and above 2% of the market value of the underlying security.
- D. If the dividend is declared as an 'interim' dividend rather than a 'final' dividend.
- E. If the dividend declared is more than 5% of the paid-up capital of the company.
Answer: C
Explanation:
According to the methodology for adjustment in Equity F&O, for extra-ordinary dividends i.e., at and above 2 percent of the market value of the underlying security, there would be an adjustment in Equity F&O. Dividends below this threshold are deemed ordinary and no adjustment is made.
NEW QUESTION # 41
Which of the following statements accurately describe the application of the 'Close Out' procedure by the Clearing Corporation? (Select all that apply)
- A. Delivery shortages in securities undergoing corporate action are directly closed out.
- B. Close out is conducted if an auction for short delivery finds no sellers.
- C. The close out price is strictly fixed at the closing price of the trade day for all scenarios.
- D. Any surplus proceeds from a close out are credited to the defaulting party's settlement account.
- E. Securities under 'Trade for Trade' category are subject to direct close out without an auction.
Answer: A,B,E
Explanation:
Option A is correct: Close out happens if auction finds no sellers. Option B is correct: Securities in trade for trade are directly closed out. Option D is correct: Securities under corporate action are directly closed out. Option C is incorrect because surplus is credited to Core SGF. Option E is incorrect because the price formula involves highest price or 20% mark-up.
NEW QUESTION # 42
With the validation of instructions for Pay-In of securities from Client demat account to Member Pool Account, what action do Depositories take if the quantity in the transfer instruction is more than the obligation provided by the Clearing Corporation (CC)?
- A. The instruction is held in pending status until the Member confirms the additional quantity.
- B. The instruction is completely rejected.
- C. The instruction is processed for the full quantity, and excess is returned by the Member.
- D. The instruction is processed only if the client provides a specific indemnity bond.
- E. The instruction is partially processed by the depositories up to the matching obligation quantity.
Answer: E
Explanation:
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 # 43
Select the correct statements regarding the online risk management system capabilities that a broker must possess for Middle Office Operations. (Select all that apply)
- A. The system should strictly allow order modification only after trade execution is confirmed by the back office.
- B. The system should have the capability to generate reports relating to margin requirements and delivery obligations.
- C. The system must maintain separate ledgers for proprietary and client trades but need not monitor them in real-time.
- D. The system must have on-line real-time risk management for all orders placed on the exchange trading system.
- E. Only orders within parameters like Order Quantity, Value Limits, and Price Limits should be pushed to the exchange.
Answer: B,D,E
Explanation:
The source specifies: 'The broker system should have an on-line risk management capability for all orders placed on the Exchange platform.' (Option A). 'The system should have pre-defined limits / checks such as Order Quantity and Value Limits... and only such orders which are within the parameters specified by the RMS are allowed to be pushed into exchange trading engines.' (Option C). 'The broker system should have capability to generate reports relating to margin requirements, payments, and delivery obligations.' (Option E).,
NEW QUESTION # 44
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 preserved for 3 years, and reports furnished to clients annually.
- B. Books of account must be audited yearly, and a report furnished to the client not exceeding a period of three months.
- 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.
Answer: B
Explanation:
The portfolio manager shall furnish periodically a report to the client, as agreed in the contract, but not exceeding a period of three months. The books of account will be audited yearly by a qualified auditor. Books must be maintained for 5 years.
NEW QUESTION # 45
Under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003, specific activities are defined as manipulative or unfair. Which of the following scenarios describes 'Front Running', a prohibited practice under these regulations?
- A. An intermediary buying securities in advance of a substantial client order effectively anticipating price movement due to that order.
- B. An insider trading in shares based on unpublished price sensitive information regarding a merger.
- C. Publishing a research report with false information to induce the sale of securities.
- D. Splitting a large order into smaller trades to minimize impact cost.
- E. Buying and selling securities between intermediaries to artificially inflate trading volumes without changing beneficial ownership.
Answer: A
Explanation:
Front running involves the usage of non-public information to directly or indirectly buy or sell securities in advance of a substantial order, anticipating that the price may change when the information (the order) becomes public. This gives the broker an unfair advantage.
NEW QUESTION # 46
Regarding the execution of a 'Delivery Instruction Slip' (DIS) for debiting a beneficiary account in a depository, which of the following conditions is **MANDATORY** for the instruction to be processed?
- A. The DIS must be counter-signed by a SEBI registered official.
- B. The DIS must be physically submitted even if the client has enabled electronic DIS facilities.
- C. The execution date on the DIS cannot be a future date; it must be the same as the submission date.
- D. The DIS must be signed only by the primary holder in case of joint accounts.
- E. The DIS must clearly indicate whether the trade is an 'off-market' trade or a 'market' trade.
Answer: E
Explanation:
A beneficiary account can be debited only if the beneficial owner has given 'Delivery Instruction Slip' (DIS) in the prescribed form. The DIS for an off-market trade or for a market trade has to be clearly indicated in the form by marking appropriately.
NEW QUESTION # 47
Which of the following statements accurately describes the currency and jurisdictional nature of an International Financial Services Centre (IFSC) in India?
- A. It operates under the jurisdiction of the state government where it is located, dealing in dual currencies.
- B. It is a deemed domestic territory for FEMA purposes but deals in foreign currency.
- C. It caters to domestic customers only, offering products in foreign currency.
- D. It is a jurisdiction providing financial services to non-residents and residents (to the extent permissible) in a currency other than the domestic currency (Indian Rupee).
- E. It operates in Indian Rupee (INR) but is exempt from RBI regulations.
Answer: D
Explanation:
An IFSC is defined as a jurisdiction that provides world-class financial services to non-residents and residents (to the extent permissible under current regulations) in a currency other than the domestic currency (Indian rupee) of the location where the IFSC is located.
NEW QUESTION # 48
Under the 'Beta version of T+0 rolling settlement cycle on optional basis', which of the following operational parameters regarding trading hours, price bands, and shortage handling is correctly defined?
- A. Pay-in for T+0 sell obligations is allowed only by way of early pay-in using the block mechanism.
- B. The price band is fixed at +1-5% of the closing price in the regular T+1 market.
- C. Netting of pay-in and pay-out obligations is permitted between T+1 and T+0 settlement cycles.
- D. Security shortages are handled through an auction session conducted on the same day.
- E. The trading session operates continuously from 09:15 AM to 3:30 PM.
Answer: A
Explanation:
For T+0 settlement: Pay-in for T+0 sell obligations is allowed only by way of early pay-in using block mechanism. Trading timings are 09:15 AM to 1:30 PM. The price band is +1- 100 basis points from the T+1 price. There is no netting between T+1 and T+0. Security shortages are directly closed out, not auctioned.
NEW QUESTION # 49
Distinguishing the roles of market segments is vital for understanding capital formation. Which statement correctly identifies the primary interaction dynamic in the Secondary Market compared to the Primary Market?
- A. It is used primarily for Initial Public Offers (IPOs) and Rights Issues.
- B. It ensures availability of adequate capital at reasonable rates for expansion.
- C. Dealings are strictly between two investors, and the issuer does not come into the picture.
- D. The settlement is always done directly between the issuer and the clearing corporation.
- E. The issuer has direct contact with the investor to raise new capital.
Answer: C
Explanation:
The source clarifies that in the primary market, the issuer has direct contact with the investor. In contrast, in the secondary market, the dealings are between two investors and the issuer does not come into the picture. The secondary market provides liquidity/transferability to existing securities.
NEW QUESTION # 50
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