A settlement team catches a mismatched trade
Series VII practice case · 4 questions · 1 mark each
Question 1 of 4Case practice
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The confirmed trade ledger for one client and one security shows purchases of 100 shares at ₹500 and 200 shares at ₹505, and a sale of 150 shares at ₹510. For this exercise all three trades are in the same netting set, and securities and funds obligations are netted. Ignore charges and taxes. The client has reserved ₹80,000 for the resulting cash obligation. A draft operations file incorrectly records the sale quantity as 160 shares while the confirmed contract record says 150. The team must calculate obligations from the confirmed records and resolve the discrepancy before final processing.
The specified trades are eligible for netting in the fictional clearing set.
No real exchange settlement timing or charge is assumed.
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The case and its answers
Every question of this case, with its answer and why each other option is wrong.
The confirmed trade ledger for one client and one security shows purchases of 100 shares at ₹500 and 200 shares at ₹505, and a sale of 150 shares at ₹510. For this exercise all three trades are in the same netting set, and securities and funds obligations are netted. Ignore charges and taxes. The client has reserved ₹80,000 for the resulting cash obligation. A draft operations file incorrectly records the sale quantity as 160 shares while the confirmed contract record says 150. The team must calculate obligations from the confirmed records and resolve the discrepancy before final processing.
The specified trades are eligible for netting in the fictional clearing set.
No real exchange settlement timing or charge is assumed.
Q1What is the total purchase consideration in the confirmed ledger?
Option A. ₹1,50,000
Why it is wrong: This prices both purchase trades at ₹500.
Option B. ₹1,01,000
Why it is wrong: This includes only the 200-share purchase.
Option C. ₹76,500
Why it is wrong: This is the sale consideration.
Option D. ₹1,51,000 — Correct answer
Answer: D. Purchase consideration = 100 × 500 + 200 × 505 = ₹1,51,000. Remember: Preserve each trade’s price when aggregating obligations.
Hint, shown before you answer in practice mode: Calculate each purchase separately, then add.
VII-P-C01-Q1mediumnumerical
Q2What is the client’s net securities receipt from the confirmed trades?
Option A. 150 shares — Correct answer
Option B. 140 shares
Why it is wrong: This uses the incorrect draft sale quantity of 160.
Option C. 300 shares
Why it is wrong: This ignores the sale.
Option D. 450 shares
Why it is wrong: This adds purchases and sales rather than netting opposite directions.
Answer: A. Net receipt = 100 + 200 − 150 = 150 shares. The draft 160-share entry must not replace the confirmed record. Remember: Reconcile quantities against the authoritative trade record.
Hint, shown before you answer in practice mode: Subtract confirmed sales from purchases.
VII-P-C01-Q2mediumnumerical
Q3What net cash must the client pay before charges?
Option A. ₹69,400
Why it is wrong: This incorrectly uses the draft sale of 160 shares.
Option B. ₹76,500
Why it is wrong: This is sale proceeds, not the net payment.
Option C. ₹74,500 — Correct answer
Option D. ₹1,51,000
Why it is wrong: This ignores sale proceeds available within the specified netting set.
Answer: C. Net payment = ₹1,51,000 − (150 × ₹510) = ₹74,500. The reserved cash exceeds this by ₹5,500. Remember: Net cash is not the same as gross purchase or sale consideration.
Hint, shown before you answer in practice mode: Deduct sale proceeds from purchase consideration.
VII-P-C01-Q3mediumnumerical
Q4How should the team handle the draft sale quantity of 160?
Option A. Use 160 because the draft is the latest file
Why it is wrong: A later timestamp does not make an unverified trade quantity authoritative.
Option B. Average the two quantities to 155
Why it is wrong: Averaging records invents a trade that was never confirmed.
Option C. Investigate and correct it against the confirmed 150-share record before final processing — Correct answer
Option D. Use the lower cash obligation without investigation
Why it is wrong: This knowingly leaves the securities and cash records inconsistent.
Answer: C. The confirmed record supports a sale of 150 shares. The team should preserve an audit trail, resolve the mismatch and process corrected obligations instead of selecting a convenient figure. Remember: A reconciliation control prevents an incorrect obligation from flowing downstream.
Hint, shown before you answer in practice mode: The discrepancy affects both cash and share obligations.
VII-P-C01-Q4easyapplication
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