SEBI (Foreign Portfolio Investors) Regulations, 2019
5 questions. Each answer is explained.
Question 1 of 5Practice · 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
- Regulatory Framework – General View14
- 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 (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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 5 questions on SEBI (Foreign Portfolio Investors) Regulations, 2019, with answers
Q1Who grants a foreign portfolio investor’s registration certificate on SEBI’s behalf under the FPI framework?
Option A. A designated depository participant — Correct answer
Option B. Any registered depository participant without designation
Why it is wrong: This registration role requires the designated status specified in the FPI framework.
Option C. The issuer’s registrar and share transfer agent
Why it is wrong: An issuer’s registrar does not grant an FPI registration certificate on SEBI’s behalf.
Option D. The investor’s overseas investment manager
Why it is wrong: An overseas investment manager cannot substitute for the designated registration authority.
Answer: A. A designated depository participant grants the FPI registration certificate on behalf of SEBI under the framework. Remember: FPI registration uses a designated depository participant under SEBI’s framework.
Hint, shown before you answer in practice mode: Common mistake: Assuming any intermediary can independently grant an FPI certificate. Recall the specialised authorised entity in the registration process.
III-A-087easyregulatory
Q2Which investor type is expressly associated with Category I foreign portfolio investors, subject to eligibility requirements?
Option A. A foreign sovereign wealth fund — Correct answer
Option B. An unregulated foreign family office
Why it is wrong: An unregulated family office is not automatically in Category I.
Option C. An ordinary foreign individual investor
Why it is wrong: An ordinary individual does not qualify for Category I merely by being foreign.
Option D. An ordinary foreign corporate treasury
Why it is wrong: An ordinary corporate treasury is not automatically government-related or Category I.
Answer: A. A foreign sovereign wealth fund is included in the Category I government-related investor group, subject to eligibility. Remember: Category depends on the investor’s qualifying nature, not merely foreign residence.
Hint, shown before you answer in practice mode: Common mistake: Treating all foreign investors as one registration category. Distinguish government-related investors from the residual category.
III-A-088easyregulatory
Q3A foreign family office satisfies FPI eligibility requirements but does not qualify for Category I. Which category applies?
Option A. Category I automatically
Why it is wrong: Eligibility alone does not establish Category I status.
Option B. Category III
Why it is wrong: The current FPI framework does not use Category III for this residual classification.
Option C. An unregistered FPI category
Why it is wrong: Eligibility does not create an unregistered FPI category.
Option D. Category II — Correct answer
Answer: D. The family office falls in Category II when it is eligible but does not meet Category I conditions. Remember: Eligible non-Category-I investors fall within the applicable Category II framework.
Hint, shown before you answer in practice mode: Common mistake: Carrying an obsolete FPI category structure into the current framework. Recall the category for eligible investors not falling within Category I.
III-A-089mediumapplication
Q4For the individual FPI investment limit, whose holdings must be considered together with the FPI’s own holdings?
Option A. Holdings of every unrelated FPI using the same custodian
Why it is wrong: Sharing a custodian does not by itself make unrelated FPIs one investor group.
Option B. Holdings of every unrelated investor from the same country
Why it is wrong: A common country alone does not require this blanket aggregation.
Option C. Holdings of every domestic client of the same broker
Why it is wrong: An unrelated domestic brokerage client is not automatically part of the FPI’s investor group.
Option D. Holdings of its applicable investor group — Correct answer
Answer: D. The FPI’s applicable investor-group holdings are aggregated for the individual investment limit. Remember: A regulatory investment limit may apply to a group rather than a single account.
Hint, shown before you answer in practice mode: Common mistake: Testing a limit account by account while ignoring required aggregation. Look for linked ownership or control rather than a shared trading venue.
III-A-090mediumregulatory
Q5An FPI investor group holds 9.4% of a company’s fully diluted equity capital. A proposed purchase adds 0.7%. Does this remain below the FPI limit?
Option A. Yes, because the purchase alone is below 10%
Why it is wrong: The test applies to the aggregate holding rather than only the latest purchase.
Option B. No, the resulting holding is 10.1% — Correct answer
Option C. Yes, because the resulting holding is 9.47%
Why it is wrong: Adding 0.7 percentage points to 9.4 gives 10.1 rather than 9.47.
Option D. No, because every holding above 5% is prohibited
Why it is wrong: Five percent is not the stated individual FPI-group threshold.
Answer: B. The resulting holding is 10.1%, so it is not below the 10% individual FPI-group threshold. Total = 9.4% + 0.7% = 10.1%. This question tests the threshold, not subsequent divestment or FDI treatment. Remember: Check the aggregate fully diluted holding before the proposed purchase.
Hint, shown before you answer in practice mode: Common mistake: Comparing only the order size with the regulatory limit. Aggregate the existing stake and the proposed additional percentage points.
III-A-091hardnumerical
SEBI (Foreign Portfolio Investors) Regulations, 2019: common questions
How many practice questions are there on SEBI (Foreign Portfolio Investors) Regulations, 2019?
5 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 SEBI (Foreign Portfolio Investors) Regulations, 2019?
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.
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