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

1. To ensure a smooth settlement process in case of holidays, Clearing Corporations (CCs) are required to follow a specific operational sequence. Which of the following statements accurately describes this sequence regarding multiple settlements scheduled for the same day?

A) The pay-out of the subsequent settlement must be completed before the pay-in of the first settlement to ensure liquidity.
B) Settlements are aggregated into a single net obligation for the entire holiday period to avoid sequential processing.
C) CCs shall process all pay-ins for all scheduled settlements simultaneously before initiating any pay-outs.
D) CCs shall prioritize the settlement with the highest volume, regardless of the chronological order of trade dates.
E) The pay-in and pay-out of the first settlement shall be completed before the commencement of the pay-in and pay-out of the subsequent settlement(s).

2. In the context of the validation process for Pay-In of securities from a client's demat account to the Member Pool Account, how do Depositories handle a specific transfer instruction where the quantity specified in the instruction exceeds the client-wise net delivery obligation provided by the Clearing Corporation?

A) The instruction is processed fully, but the excess securities are immediately returned to the client's account by the Clearing Member.
B) The instruction is processed fully, creating an excess balance in the Member Pool Account which is flagged for audit.
C) The instruction is kept pending until the Clearing Corporation updates the obligation to match the instruction.
D) The instruction is rejected in its entirety due to the discrepancy in quantity.
E) The instruction is partially processed by the depositories up to the matching obligation quantity.

3. To ensure visibility of client collateral and prevent misuse, SEBI mandated a reporting mechanism. How is the disaggregated collateral information reported up the chain to the Clearing Corporation?

A) Clients report directly to the Clearing Corporation via the web portal.
B) Depositories report the collateral usage directly to the Clearing Corporation based on pledge data.
C) Clearing Members (CM) report only the aggregate figures to the CC, keeping client-level data internal.
D) Trading Members (TM) report directly to the Stock Exchanges, which then forward data to the CC.
E) Trading Members (TM) report to the Clearing Member (CM), and the CM reports to the Stock Exchanges and Clearing Corporations.

4. A financial services firm applies for registration as a Portfolio Manager. They nominate Mr. X as the Principal Officer. Mr. X holds a professional qualification in finance from a recognized university. Regarding his experience, which of the following conditions MUST he satisfy to meet the eligibility criteria?

A) Experience of at least 5 years strictly as a stock broker or dealer in the equity derivatives segment.
B) Experience of at least 7 years in related activities in the securities market, with no specific requirement for portfolio management experience.
C) Experience of at least 5 years in related activities in the securities market, including at least 2 years in portfolio management or investment advisory services or fund management.
D) Experience of at least 3 years in related activities in the securities market, with at least 1 year in portfolio management.
E) Experience of at least 2 years in related activities in the securities market if he holds a CFA charter.

5. 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) Default losses are covered solely by the Investor Protection Fund (IPF) in the case of net settlement defaults.
B) The Core Settlement Guarantee Fund (SGF) of the F&O segment is utilized first for any default arising from the net settlement obligation.
C) The default waterfall is triggered only after liquidating the defaulting member's proprietary assets across all exchanges.
D) Clearing Corporations create a unified single default waterfall covering both segments to match the merged settlement.
E) 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.

Solutions: