Legal and Regulatory Environment
15 questions. Each answer is explained.
Question 1 of 10Practice · Series XV — Research Analyst
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Learn these topics
More units in NISM Series XV
- Introduction to Research Analyst Profession2
- Introduction to Securities Market3
- Terminology in Equity and Debt Markets3
- Fundamentals of Research7
- Economic Analysis7
- Industry Analysis12
- Company Analysis – Business and Governance9
- Company Analysis – Financial Analysis16
- Corporate Actions7
- Valuation Principles13
- Fundamental analysis of commodities9
- Fundamentals of Risk and Return10
- Qualities of a Good Research Report7
- Technical Analysis22
- Case Study - Valuation8
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series XV Research Analyst
Exam rules read on NISM's site on 3 October 2026. Exam pattern revised on 20 January 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 3 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 15 questions on Legal and Regulatory Environment, with answers
Q1Under the SEBI Research Analysts framework, which of the following is specifically relevant to ownership/conflict disclosure in a research report?
Option A. Whether the subject company has ever changed its statutory auditor, regardless of materiality
Why it is wrong: An auditor change can matter to the analysis, but it is not this ownership disclosure.
Option B. Whether the analyst, associates or relatives own 1% or more of the company's securities — Correct answer
Option C. Whether the analyst personally prefers growth investing or value investing
Why it is wrong: A personal investing style is not a required disclosure.
Option D. Whether the stock has outperformed the market index for exactly 30 trading days in a row
Why it is wrong: Past share-price performance is not this rule's disclosure.
Answer: B. SEBI's Research Analysts Regulations ask a report to disclose financial interests and conflicts. One of them is whether the analyst, the research entity or their associates or relatives own 1% or more of the company's securities, directly or beneficially. Remember: Regulatory disclosure questions require exact attention to who, what interest, and what threshold the rule covers.
Hint, shown before you answer in practice mode: Common mistake: Replacing a specific conflict-of-interest disclosure with a generic company-analysis fact.
XV-024mediumregulatory
Q2A listed company offers a research analyst a commercial engagement on the condition that the next report carries a favourable view of the company. Which response is consistent with the SEBI Research Analysts framework?
Option A. Reject it, because a favourable view cannot be promised in return for business — Correct answer
Option B. Accept it as long as the company is already profitable and well run
Why it is wrong: The issuer's profitability does not remove the conflict.
Option C. Accept the engagement if the promised favourable rating is disclosed in a footnote
Why it is wrong: Disclosure does not cure a prohibited quid-pro-quo arrangement.
Option D. Accept it if the report is distributed only to paying clients, not the public
Why it is wrong: The type of distribution does not make the conduct permissible.
Answer: A. The RA framework prohibits promising or assuring a favourable review in consideration of commencing or influencing a business relationship, compensation or other benefits. Research must remain independent and supported by an adequate documentary basis. Remember: Research independence cannot be traded for business, compensation or another benefit.
Hint, shown before you answer in practice mode: Common mistake: Assuming a conflict becomes acceptable merely because it is disclosed.
XV-025mediumregulatory
Q3An independent research analyst plans to publish a research report on Company K. Ignoring the specified exceptional circumstances, which personal-dealing restriction is consistent with the current SEBI Research Analysts Regulations?
Option A. The analyst may freely trade right up to the publication date but not afterward
Why it is wrong: The ban also covers the days before publication.
Option B. The analyst is prohibited from ever owning any listed security, including ones never covered
Why it is wrong: It is not a lifetime ban on owning listed securities.
Option C. The restriction applies only on the day the report is published
Why it is wrong: The ban covers more than the publication day.
Option D. The analyst and associates must not deal from 30 days before to 5 days after publication — Correct answer
Answer: D. The current Research Analysts Regulations stop the analyst and associates from dealing in a security they cover from 30 days before to 5 days after the report is published. A few exceptions exist, with conditions and prior written approval. Remember: Regulatory timelines must be remembered precisely and with awareness of the rule's scope and exceptions.
Hint, shown before you answer in practice mode: Common mistake: Remembering only the post-publication restriction and forgetting the pre-publication window.
XV-048hardregulatory
Q4A SEBI-registered research analyst provides several research services to an individual client who is not an accredited investor. Under the current SEBI/RAASB fee framework, what is the present maximum annual fee per family of client for all research services of that RA, excluding statutory charges?
Option A. ₹1,51,000 — Correct answer
Option B. ₹1,00,000
Why it is wrong: This is not the current specified ceiling.
Option C. ₹75,000
Why it is wrong: This is below the currently specified ceiling.
Option D. There is no maximum
Why it is wrong: A ceiling applies to the specified individual/HUF client category.
Answer: A. The current limit specified for individual and HUF clients is ₹1,51,000 per annum per family of client for all research services of the RA, excluding statutory charges. The fee limit does not apply in the same way to non-individual clients or accredited investors. Remember: Fee-limit questions are date-sensitive: identify the client category, annual/family basis and exclusions.
Hint, shown before you answer in practice mode: Common mistake: Quoting an old fee value or forgetting that the limit is per family and excludes statutory charges.
XV-049hardregulatory
Q5A research analyst's maximum number of clients on any day of the previous financial year was 275. Under the current SEBI deposit slabs for research analysts, what deposit is required?
Option A. ₹1 lakh
Why it is wrong: ₹1 lakh applies to up to 150 clients.
Option B. ₹2 lakh — Correct answer
Option C. ₹5 lakh
Why it is wrong: ₹5 lakh applies to 301–1,000 clients.
Option D. ₹10 lakh
Why it is wrong: ₹10 lakh applies to 1,001 and above.
Answer: B. The current deposit slabs are based on the maximum number of clients on any day of the previous financial year. For 151 to 300 clients, the required deposit is ₹2 lakh. Therefore, a maximum client count of 275 falls in the ₹2 lakh slab. Remember: Deposit requirements are client-count based. Use the maximum client count from the previous financial year and apply the correct slab.
Hint, shown before you answer in practice mode: Common mistake: Using current client count instead of the previous financial year's maximum, or carrying forward an old capital/net-worth rule.
XV-050mediumnumerical
Q6A registered research analyst uses an artificial-intelligence tool to help screen companies and draft portions of a research report for a client. Under the current SEBI Research Analysts framework, which statement is most accurate?
Option A. AI may be used only if the client first agrees in writing to waive confidentiality protections
Why it is wrong: A client cannot waive the analyst’s regulatory responsibility for confidentiality and compliance.
Option B. Using AI transfers responsibility for the research output to the technology vendor that supplies the AI tool
Why it is wrong: Responsibility does not shift to the technology vendor merely because AI is used.
Option C. The analyst remains responsible for the research service and must disclose to the client the extent of AI use — Correct answer
Option D. The analyst need not review AI-generated output as long as the tool is commercially licensed from a well-known vendor
Why it is wrong: Commercial licensing does not remove the need for analyst oversight and accountability.
Answer: C. The current Research Analysts framework places responsibility on the research analyst or research entity for the security, confidentiality and integrity of client data, the information used for research, the research service based on AI output and compliance with applicable law. It also requires disclosure to the client of the extent of AI use in providing research services. Remember: AI can assist research, but regulatory accountability remains with the research analyst or research entity.
Hint, shown before you answer in practice mode: Common mistake: Treating research drafted with an AI tool as the tool's responsibility instead of the analyst's.
XV-051mediumregulatory
Q7An analyst privately receives unreleased quarterly results from a connected person, and the results are likely to materially affect the share price when made public. How should the information be treated?
Option A. As possible unpublished price-sensitive information, not to be shared or traded on — Correct answer
Option B. As ordinary public information, because it concerns the company’s financial statements
Why it is wrong: Results that are not yet released are not public, and they can move the price a lot.
Option C. As harmless information, because the analyst did not ask for it
Why it is wrong: Not asking for the information does not make it safe to trade on or share.
Option D. As information that becomes public once the analyst writes it in a private note
Why it is wrong: Writing it in a private note does not make it public.
Answer: A. Unreleased results that are likely to move the price are possible UPSI, unpublished price-sensitive information. SEBI's insider-trading rules say it must not be shared or traded on, except in the few cases the rules allow, such as a legitimate purpose or a legal duty. Remember: Research does not create an exemption from insider-trading restrictions.
Hint, shown before you answer in practice mode: Common mistake: Assuming analysts may use any information they receive so long as they did not actively solicit it.
XV-095hardregulatory
Q8A security is placed under an exchange surveillance framework such as ASM or GSM. What is the most appropriate interpretation by a research analyst?
Option A. The inclusion is by itself a final finding that the company committed fraud
Why it is wrong: Surveillance inclusion is not the same as an adjudicated fraud finding.
Option B. It is a surveillance signal needing extra checks, not proof of wrongdoing — Correct answer
Option C. The security can no longer be analysed or covered in research
Why it is wrong: Analysts can still analyse a security subject to applicable rules and data availability.
Option D. All financial statements of the company automatically become invalid
Why it is wrong: Surveillance status does not automatically invalidate audited accounts.
Answer: B. Exchange surveillance measures are designed to enhance market integrity and caution investors or market participants. Inclusion can lead to additional trading or margin conditions depending on the framework and stage, but inclusion itself should not be presented as a conclusive finding of fraud. Remember: Treat surveillance status as a risk signal with specific market consequences, not as proof of misconduct.
Hint, shown before you answer in practice mode: Common mistake: Turning an exchange surveillance designation into an unsupported accusation.
XV-096mediumregulatory
Q9Which regulator is primarily associated with regulation and development of the pension sector in India?
Option A. RBI
Why it is wrong: RBI is the central bank and has banking, monetary and related regulatory functions.
Option B. IRDAI
Why it is wrong: IRDAI regulates the insurance sector.
Option C. PFRDA — Correct answer
Option D. WDRA
Why it is wrong: WDRA relates to warehousing and negotiable warehouse-receipt regulation.
Answer: C. PFRDA is the Pension Fund Regulatory and Development Authority and is the specialist regulator for the pension sector under its statutory framework. Remember: Know the broad institutional responsibilities of India's principal financial-sector regulators.
Hint, shown before you answer in practice mode: Common mistake: Confusing regulators because several operate within the wider financial system.
XV-133easyregulatory
Q10A research entity intends to send a new recommendation to its proprietary trading desk two hours before sending it to clients who are entitled to receive the report. Under the SEBI Research Analysts framework, this is:
Option A. Permitted if the trading desk promises in writing not to trade on the report
Why it is wrong: A promise not to trade does not make selective advance distribution compliant with the rule.
Option B. Not permitted, as the trading desk cannot get research before clients — Correct answer
Option C. Permitted whenever the report is clearly labelled as confidential
Why it is wrong: A confidentiality label does not override the distribution requirement.
Option D. Required before every client distribution, as a final check
Why it is wrong: Advance internal distribution is not a mandatory step.
Answer: B. SEBI's Research Analysts Regulations prohibit selectively making a research report available in advance to internal trading personnel or to a particular client or class of clients ahead of other entitled clients. Remember: Research distribution should not create preferential early access for internal trading personnel or selected entitled clients.
Hint, shown before you answer in practice mode: Common mistake: Focusing only on whether the recipient trades, rather than on the selective-distribution prohibition itself.
XV-134hardregulatory
Q11Two connected traders repeatedly enter matched orders with no genuine change in beneficial ownership, mainly to create a false appearance of market activity. This conduct most directly raises concerns under rules dealing with:
Option A. Dividend policy of listed companies
Why it is wrong: The conduct is about market manipulation, not dividend policy.
Option B. Corporate income tax assessment
Why it is wrong: Tax assessment is unrelated to the trading pattern described.
Option C. Research-report formatting rules
Why it is wrong: The issue is trading conduct, not research-report layout.
Option D. Fraudulent and unfair trade practices — Correct answer
Answer: D. Transactions designed to create a false or misleading appearance of trading or market activity can fall within the framework prohibiting fraudulent and unfair trade practices. Remember: Market-abuse rules focus on deceptive conduct and artificial market activity, not merely on whether trades technically occurred.
Hint, shown before you answer in practice mode: Common mistake: Assuming a trade is legitimate simply because an order was entered and executed.
XV-135mediumregulatory
Q12A research entity has a contractual relationship with an external research provider and distributes that provider's report to clients. Which obligation is consistent with the SEBI Research Analysts Regulations?
Option A. Review it for false or misleading content and disclose the provider's conflicts — Correct answer
Option B. Distribute the report without any review at all, because the entity did not write it
Why it is wrong: Distribution does not automatically eliminate review responsibilities where the rule applies.
Option C. Remove the external provider's name and present the report as the entity's own work
Why it is wrong: Misrepresenting authorship would undermine transparency.
Option D. Guarantee the accuracy of every future market forecast that is made in the report
Why it is wrong: Research forecasts cannot be guaranteed.
Answer: A. Where the regulation applies, a research analyst or research entity distributing third-party research must review it for untrue statements of material fact or false or misleading information and disclose the third-party provider's material conflicts or direct recipients to the relevant disclosures. Remember: Using third-party research does not eliminate applicable diligence and conflict-disclosure responsibilities.
Hint, shown before you answer in practice mode: Common mistake: Assuming that outsourcing or redistributing research transfers all regulatory responsibility away from the distributor.
XV-136hardregulatory
Q13A brokerage firm's research analysts sit inside the investment-banking sales team and are routinely instructed by deal staff to change recommendations to help win mandates. Which control is most consistent with the SEBI Research Analysts framework?
Option A. Allow deal staff to approve every research rating before release
Why it is wrong: Giving deal staff control over ratings creates the conflict the framework seeks to manage.
Option B. Pay analysts only for successful investment-banking mandates
Why it is wrong: This would intensify the conflict.
Option C. Keep research separate from sales, trading and deal teams — Correct answer
Option D. Stop documenting the basis for recommendations to save time
Why it is wrong: Research recommendations require an adequate documentary basis.
Answer: C. The RA framework requires research independence controls, including separation of research personnel from activities such as sales, trading, dealing and corporate-finance advisory where those activities may affect independence. Remember: Research independence depends on both analyst conduct and organisational controls.
Hint, shown before you answer in practice mode: Common mistake: Treating disclosure alone as sufficient when the organisational process itself pressures analysts to alter research.
XV-137hardregulatory
Q14Under the current SEBI Research Analysts framework, a registered research analyst or research entity is required to:
Option A. Operate only through physical offices and avoid a website
Why it is wrong: The framework specifically contemplates a functional website.
Option B. Maintain a functional website with the specified details — Correct answer
Option C. Publish every internal working paper on a public website
Why it is wrong: The requirement does not mean every internal working paper must be public.
Option D. Provide research to clients only through stock exchanges
Why it is wrong: Research services are not restricted to stock-exchange distribution.
Answer: B. Regulation 19A and the related SEBI framework require a research analyst or research entity to maintain a functional website containing specified information. Remember: Operational compliance requirements can include public-facing disclosure infrastructure such as a functional website.
Hint, shown before you answer in practice mode: Common mistake: Assuming regulatory requirements concern only the contents of research reports.
XV-138mediumregulatory
Q15Which behaviour is most consistent with the professional code expected of a research analyst?
Option A. Suppressing negative evidence to keep a good relationship with the issuer
Why it is wrong: Suppressing material adverse evidence undermines objectivity and integrity.
Option B. Publishing a recommendation without any reasonable research support
Why it is wrong: Research should have an adequate analytical and documentary basis.
Option C. Promising a guaranteed return in order to attract new clients quickly
Why it is wrong: Guaranteed-return promises are inconsistent with responsible research conduct.
Option D. Acting honestly, fairly and with due care, and managing conflicts — Correct answer
Answer: D. The RA conduct framework emphasises integrity, fairness, due skill, care and diligence, independence, conflict management and proper professional standards. Remember: Professional conduct is not just about having the right answer. It is about a defensible, fair and independent process.
Hint, shown before you answer in practice mode: Common mistake: Treating research as a sales activity rather than a regulated professional function.
XV-139mediumregulatory
Legal and Regulatory Environment: common questions
How many practice questions are there on Legal and Regulatory Environment?
15 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 16 practice topics for NISM Series XV, which has 150 questions in total.
Are these real NISM Series XV questions on Legal and Regulatory Environment?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
Does negative marking apply to NISM Series XV?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Technical Analysis
22 questions on Technical Analysis. Its quiz opens on that unit.
Open Technical Analysis