Regulatory Framework – General View
14 questions. Each answer is explained.
Question 1 of 10Practice · Series III-A — Securities Intermediaries Compliance (Non-Fund)
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Learn these topics
More units in NISM Series III-A
- Introduction to the Financial System8
- Introduction to Compliance6
- Securities and Exchange Board of India Act, 199211
- Securities Contracts (Regulation) Act, 1956 and Rules, 19576
- SEBI (Intermediaries) Regulations, 20089
- SEBI (Prohibition of Insider Trading) Regulations, 20159
- SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 20039
- Prevention of Money Laundering Act, 200211
- SEBI (KYC Registration Agency) Regulations, 20113
- SEBI (Foreign Portfolio Investors) Regulations, 20195
- SEBI (Stock Brokers) Regulations, 19929
- SEBI (Merchant Bankers) Regulations 1992, etc.9
- SEBI (Issue of Capital and Disclosure Requirements) Regulations 20189
- Depositories Act 19963
- SEBI (Depositories and Participants) Regulations 20184
- SEBI (Registrar to an Issue and Share Transfer Agents) Regulations, 19934
- SEBI (Research Analyst) Regulations, 20143
- SEBI (Investment Advisers) Regulations, 20133
- SEBI (Debenture Trustees) Regulations, 19934
- SEBI (Credit Rating Agencies) Regulations, 19994
- SEBI (Custodian) Regulations, 19964
- Proxy Advisors3
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 III-A Securities Intermediaries Compliance (Non-Fund)
Exam rules read on NISM's site on 17 October 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 17 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 14 questions on Regulatory Framework – General View, with answers
Q1Which regulator primarily oversees India’s securities market and protects investors in securities?
Option A. RBI
Why it is wrong: RBI primarily handles central banking and its assigned financial sectors.
Option B. IRDAI
Why it is wrong: IRDAI regulates insurance rather than the securities market generally.
Option C. PFRDA
Why it is wrong: PFRDA regulates the pension sector within its statutory remit.
Option D. SEBI — Correct answer
Answer: D. The Securities and Exchange Board of India, or SEBI, regulates the securities market and protects investors in securities. Remember: SEBI’s core mandate concerns investors and the securities market.
Hint, shown before you answer in practice mode: Common mistake: Assuming one financial regulator governs every financial product. Match the market being regulated with the regulator’s mandate.
III-A-009easyconceptual
Q2Which institution performs India’s central banking functions, including monetary policy implementation?
Option A. SEBI
Why it is wrong: SEBI supervises securities markets rather than implementing monetary policy.
Option B. IRDAI
Why it is wrong: IRDAI’s primary remit is insurance regulation.
Option C. RBI — Correct answer
Option D. PFRDA
Why it is wrong: PFRDA’s primary remit is pension regulation.
Answer: C. The Reserve Bank of India, or RBI, is India’s central bank and performs monetary-policy functions. Remember: Central banking and securities regulation are different functions.
Hint, shown before you answer in practice mode: Common mistake: Assigning monetary policy to the securities-market regulator. Distinguish monetary policy from securities-market supervision.
III-A-010easyconceptual
Q3Which regulator primarily oversees insurance companies and the insurance business in India?
Option A. SEBI
Why it is wrong: SEBI is not the primary regulator of the insurance business.
Option B. RBI
Why it is wrong: A bank distributing insurance does not make RBI the primary insurance regulator.
Option C. PFRDA
Why it is wrong: PFRDA’s pension remit does not make it the general insurance regulator.
Option D. IRDAI — Correct answer
Answer: D. The Insurance Regulatory and Development Authority of India, or IRDAI, regulates the insurance sector. Selling insurance through a bank does not change its primary insurance regulator. Remember: A distributor’s identity does not change the product’s primary regulator.
Hint, shown before you answer in practice mode: Common mistake: Assuming a product sold by a bank must be regulated only by RBI. Focus on the product’s legal category rather than where it is sold.
III-A-011easyconceptual
Q4Which authority regulates the National Pension System within its statutory remit?
Option A. IRDAI
Why it is wrong: IRDAI’s insurance mandate does not make it the regulator of the National Pension System.
Option B. PFRDA — Correct answer
Option C. SEBI
Why it is wrong: SEBI’s securities remit differs from PFRDA’s pension-system remit.
Option D. RBI
Why it is wrong: RBI is the central bank rather than the pension-system regulator.
Answer: B. The Pension Fund Regulatory and Development Authority, or PFRDA, regulates the National Pension System under its statutory mandate. Remember: PFRDA is the key regulator for the National Pension System.
Hint, shown before you answer in practice mode: Common mistake: Treating every retirement product as an insurance product. Identify the regulator assigned to the pension system.
III-A-012easyconceptual
Q5Which authority maintains statutory company-registration records and receives prescribed corporate filings?
Option A. The stock exchange clearing corporation
Why it is wrong: A clearing corporation manages clearing and settlement rather than incorporation records.
Option B. The Registrar of Companies — Correct answer
Option C. The depository participant
Why it is wrong: A depository participant services securities accounts rather than company-registration filings.
Option D. The Financial Intelligence Unit-India
Why it is wrong: FIU-IND receives and analyses specified financial intelligence reports.
Answer: B. The Registrar of Companies administers company-registration records and prescribed corporate filings. Remember: Company registration and securities custody belong to different systems.
Hint, shown before you answer in practice mode: Common mistake: Confusing the authority that registers companies with a share transfer agent. Think of the authority responsible for company incorporation records.
III-A-013easyconceptual
Q6Which authority is the unified financial regulator for India’s International Financial Services Centres?
Option A. IFSCA — Correct answer
Option B. FIU-IND
Why it is wrong: FIU-IND is a financial intelligence body rather than the unified IFSC regulator.
Option C. IRDAI
Why it is wrong: IRDAI is not the unified regulator across IFSC financial services.
Option D. The Registrar of Companies
Why it is wrong: The Registrar of Companies handles company-law administration rather than unified IFSC regulation.
Answer: A. The International Financial Services Centres Authority, or IFSCA, is the unified financial regulator for India’s International Financial Services Centres. Remember: An IFSC has a dedicated unified financial regulator.
Hint, shown before you answer in practice mode: Common mistake: Assuming the domestic sector regulator always directly performs the IFSC role. Recall the authority created specifically for the international financial centre framework.
III-A-014easyconceptual
Q7A company proposes a statutory merger scheme requiring tribunal sanction. Which forum is normally relevant to that company-law approval?
Option A. The Securities Appellate Tribunal
Why it is wrong: SAT hears specified securities-law appeals rather than sanctioning this merger scheme.
Option B. The National Company Law Appellate Tribunal
Why it is wrong: The appellate tribunal hears appeals rather than ordinarily granting the initial scheme sanction.
Option C. The Debt Recovery Tribunal
Why it is wrong: The Debt Recovery Tribunal addresses its assigned debt-recovery matters, not this merger sanction.
Option D. The National Company Law Tribunal — Correct answer
Answer: D. The National Company Law Tribunal deals with the relevant company-law merger-sanction process. Remember: Match the legal proceeding to the forum’s statutory jurisdiction.
Hint, shown before you answer in practice mode: Common mistake: Sending every securities-related corporate matter to SAT. Separate company-law restructuring from an appeal against a securities regulator’s order.
III-A-015mediumapplication
Q8An intermediary must submit a suspicious transaction report. Which authority receives this financial intelligence report?
Option A. The Director of FIU-IND — Correct answer
Option B. The Registrar of Companies
Why it is wrong: The Registrar of Companies does not replace FIU-IND as the reporting recipient.
Option C. The company’s statutory auditor
Why it is wrong: Giving the auditor a report does not fulfil reporting to FIU-IND.
Option D. The listing committee of the exchange
Why it is wrong: A listing committee is not the prescribed financial intelligence recipient.
Answer: A. The Director of the Financial Intelligence Unit-India, or FIU-IND, receives the suspicious transaction report under the reporting framework. Remember: Suspicious transaction reporting has a designated statutory recipient.
Hint, shown before you answer in practice mode: Common mistake: Assuming internal escalation alone completes external reporting. Distinguish financial intelligence reporting from routine corporate reporting.
III-A-016mediumapplication
Q9A regulator publishes a consultation paper seeking views on a proposed limit. No final rule is issued. How should compliance classify it?
Option A. As a binding limit from the publication date
Why it is wrong: Publication for comments does not by itself make the proposed limit binding.
Option B. As a rule approved by every regulated firm
Why it is wrong: Consultation does not imply consent from every regulated firm.
Option C. As a proposal to monitor, not an operative limit — Correct answer
Option D. As an amendment to the governing Act
Why it is wrong: A consultation paper does not amend an Act of Parliament.
Answer: C. A consultation proposal is not itself the final operative rule. Remember: Separate proposed regulation from requirements already in force.
Hint, shown before you answer in practice mode: Common mistake: Applying a headline proposal before checking final notification and commencement. Check whether the document actually brings a legal requirement into force.
III-A-017mediumapplication
Q10An internal policy allows an activity that an applicable binding SEBI rule prohibits. Which requirement takes priority?
Option A. The applicable binding SEBI rule — Correct answer
Option B. The internal policy approved most recently
Why it is wrong: A newer internal policy cannot displace an applicable external rule.
Option C. The practice followed by competing firms
Why it is wrong: Industry practice cannot authorise a prohibited activity.
Option D. The client’s written request for permission
Why it is wrong: Client consent cannot waive a regulatory prohibition.
Answer: A. The binding SEBI rule takes priority because internal approval cannot override a legal prohibition. Remember: Internal policies may strengthen controls but cannot legalise prohibited conduct.
Hint, shown before you answer in practice mode: Common mistake: Using management or client approval as a substitute for legal authority. Compare a firm’s private policy with an external legal obligation.
III-A-018mediumapplication
Q11A firm meets a client’s contractual instruction but breaches an applicable regulation. How should the compliance team assess the transaction?
Option A. Client consent removes every regulatory obligation
Why it is wrong: Client consent does not eliminate duties imposed by regulation.
Option B. Contractual compliance does not cure the regulatory breach — Correct answer
Option C. A signed contract outranks the applicable regulation
Why it is wrong: A private contract does not outrank an applicable regulatory requirement.
Option D. Only the client can determine regulatory compliance
Why it is wrong: Regulatory compliance is not solely a matter of client preference.
Answer: B. Meeting the contract does not cure the breach because contractual and regulatory duties both matter. Remember: A transaction must satisfy applicable law as well as its contract.
Hint, shown before you answer in practice mode: Common mistake: Treating the client’s signature as a complete compliance defence. Consider whether a private contract can waive public-law requirements.
III-A-019mediumapplication
Q12Which legislation is the main company-law framework for incorporation and corporate governance in India?
Option A. The Depositories Act, 1996
Why it is wrong: The Depositories Act primarily concerns the depository system.
Option B. The SEBI Act, 1992
Why it is wrong: The SEBI Act establishes securities-regulatory powers rather than the general incorporation framework.
Option C. The Prevention of Money Laundering Act, 2002
Why it is wrong: The money-laundering law addresses proceeds of crime and related duties.
Option D. The Companies Act, 2013 — Correct answer
Answer: D. The Companies Act, 2013 is the main company-law framework for incorporation and corporate governance. Remember: Different laws can apply to the same company for different purposes.
Hint, shown before you answer in practice mode: Common mistake: Assuming a listed company is governed only by the SEBI Act. Look for the law governing the company as a legal organisation.
III-A-020mediumconceptual
Q13A regulation is published in June but expressly starts in August. A firm assesses a July transaction with no other applicable change. Which version applies?
Option A. The August version because it was already published
Why it is wrong: Publication does not erase an express delayed commencement provision.
Option B. Whichever version produces the smaller penalty
Why it is wrong: A firm cannot choose the rule merely to minimise a penalty.
Option C. Whichever version the firm finds easier to follow
Why it is wrong: Ease of compliance does not determine which version is legally operative.
Option D. The version legally in force during July — Correct answer
Answer: D. The July transaction is assessed against the version then in force, not a future commencement date. Remember: Check commencement and transitional provisions before applying an amendment.
Hint, shown before you answer in practice mode: Common mistake: Treating the date of publication as the effective date in every case. Separate the publication date from the commencement date.
III-A-021hardapplication
Q14A listed company follows exchange rules but ignores a separate applicable company-law filing. No exemption applies. Which conclusion is correct?
Option A. Exchange compliance replaces every company-law filing
Why it is wrong: Exchange rules do not generally repeal company-law filing duties.
Option B. Listing automatically grants a company-law exemption
Why it is wrong: Listing does not automatically confer an exemption from corporate filings.
Option C. Compliance with one regime does not discharge the other — Correct answer
Option D. The filing matters only if shareholders complain
Why it is wrong: A filing duty does not depend on a shareholder complaint.
Answer: C. Both applicable obligations remain because satisfying one legal regime does not automatically satisfy another. Remember: Build a compliance map across every applicable legal regime.
Hint, shown before you answer in practice mode: Common mistake: Assuming the most visible regulator is the only source of obligations. Consider whether the two legal obligations operate together.
III-A-022hardapplication
Regulatory Framework – General View: common questions
How many practice questions are there on Regulatory Framework – General View?
14 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 23 practice topics for NISM Series III-A, which has 150 questions in total.
Are these real NISM Series III-A questions on Regulatory Framework – General View?
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 III-A?
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.
Introduction to Compliance
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