NISM Series III-A: Securities Intermediaries Compliance (Non Fund) Mock Test (Set 4)

The IT Strategy Committee is responsible for offering insights and advice to the Board of Directors (BoD) of QRTAs on IT developments and their alignment, particularly from the perspective of investor services.

Rule 8 of SCRR (Securities Contracts (Regulation) Rules) pertains to the rules related to the admission of members of the stock exchange.

The penalty for any act of failure to redress investors’ grievances by a depository, even after being instructed by SEBI within a specified time period, would result in a maximum penalty of Rs. 1 crore, as indicated by option a.

Serious Fraud Investigation Office (SFIO). SFIO is a multi-disciplinary organization in India that investigates corporate fraud.

The shareholding of a merchant banker in the target company should be disclosed in the public announcement and the letter of offer to ensure transparency and provide relevant information to the investors. This disclosure helps in avoiding any potential conflicts of interest and maintains the integrity of the acquisition process.

The money market is a market for short-term financial instruments that serve as close substitutes for money. These instruments are highly liquid and typically have a maturity period of one year or less, making them suitable for short-term borrowing and lending.

An Alternative Investment Fund (AIF) is a privately pooled investment vehicle established or incorporated in India. It is not covered under the SEBI (Mutual Funds) Regulations, 1996, but rather operates under a separate regulatory framework defined by SEBI to regulate collective investment vehicles that do not fall under the category of mutual funds.

If a depository participant enters into an agreement with more than one depository, the records are maintained separately for each depository. This ensures proper organization and segregation of records for each depository, avoiding any confusion or mix-up of information.

Stock brokers play a role in the marketing of new issues of securities by informing and advising investors about these new issues. They facilitate the buying and selling of securities in the primary market and assist in distributing new securities to investors.

For margin trading, the total indebtedness of a stockbroker at any point in time should not exceed 5 times its net worth. This restriction helps manage risk and maintain financial stability in the securities market.

True. The principal of the business includes sole proprietors and whole-time directors. They are considered key individuals with significant influence and responsibility in the operation and management of the business.

A Category III Alternative Investment Fund is restricted to invest not more than 10% of its investable funds in one Investee Company. This regulation helps in diversifying the investment portfolio and managing risks associated with concentration in a single company.

False. Section 15F of the SEBI Act does not specifically empower SEBI to impose penalties for defaults in the case of Real Estate Investment Trusts (REITs). The SEBI Act provides for penalties in cases of various securities-related violations, but specific provisions for REITs are covered under the SEBI (Real Estate Investment Trusts) Regulations, 2014.

The Portfolio manager or Sponsor is required to maintain valuation policies and practices, investment strategies, and the rationale for investments made. This comprehensive record-keeping ensures transparency, accountability, and compliance with regulations in the management of investment portfolios.

Initial margin refers to the minimum amount, calculated as a percentage of the transaction value, that a client must place with the broker before the actual purchase. It acts as a security deposit to cover potential losses in the transaction.

Credit rating agencies that were granted a certificate of registration by SEBI prior to the commencement of the “SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016” shall be deemed to have been granted a certificate of registration under the amended regulations. This provision acknowledges their existing registration status under the updated regulatory framework.

True. According to depository regulations, all securities held by a depository must be dematerialized, meaning they exist in electronic form, and they should be in fungible form. Fungibility allows for interchangeable and indistinguishable units of the same class of securities, simplifying the trading and settlement process.

Promoting investors’ education and training of intermediaries in securities markets falls under the jurisdiction of the Securities and Exchange Board of India (SEBI) Act, 1992. SEBI is mandated to regulate and promote the development of the securities market in India, which includes initiatives for investor education and training of market intermediaries.

The act of trading by third parties who are tipped about an impending block trade is known as “Trading ahead.” This involves executing trades ahead of a known large order, potentially impacting the market price, and is considered unethical and unfair trading practice.