SEBI (Intermediaries) Regulations, 2008
9 questions. Each answer is explained.
Question 1 of 9Practice · 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 (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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 9 questions on SEBI (Intermediaries) Regulations, 2008, with answers
Q1Who must continuously follow the Intermediaries Regulations code of conduct besides the intermediary itself?
Option A. Only its largest clients and its main shareholders
Why it is wrong: Clients and shareholders are not the employee-and-management scope stated in regulation 16.
Option B. Only the external statutory auditor
Why it is wrong: The code does not apply only to the external auditor.
Option C. Only persons who hold a dealing terminal
Why it is wrong: Its scope is not confined to dealing-terminal users.
Option D. Its directors, officers, employees and key managers — Correct answer
Answer: D. Regulation 16 extends the code to directors, officers, employees and key management personnel. Remember: The conduct framework reaches the people running and working within the intermediary.
Hint, shown before you answer in practice mode: Common mistake: Assuming conduct requirements apply only to the compliance officer. Consider whether conduct duties stop at the organisation’s registration certificate.
III-A-046easyregulatory
Q2When must the applicable fit-and-proper criteria be satisfied by a registered intermediary?
Option A. Only on the initial application date
Why it is wrong: An initial assessment does not eliminate continuing eligibility obligations.
Option B. At application and throughout continued registration — Correct answer
Option C. Only after an investor files a formal complaint
Why it is wrong: A complaint is not required for the criteria to apply.
Option D. Only during the last year of operation
Why it is wrong: The criteria are not confined to an intermediary’s final year.
Answer: B. The fit-and-proper criteria apply at application and during the continuity of registration. Remember: Registration eligibility must be maintained, not merely demonstrated once.
Hint, shown before you answer in practice mode: Common mistake: Treating the initial registration decision as permanent proof of eligibility. Decide whether eligibility is a one-time test or a continuing condition.
III-A-047easyregulatory
Q3An intermediary plans to increase a service fee for existing clients. What does the general code require before the increase?
Option A. Notice only after the first higher deduction
Why it is wrong: A notice after deduction is not advance notice.
Option B. Proper advance notice to affected clients — Correct answer
Option C. Only informal approval from a competitor
Why it is wrong: A competitor cannot provide notice on behalf of affected clients.
Option D. No notice because the fee is commercial
Why it is wrong: Commercial pricing remains subject to the code’s disclosure requirement.
Answer: B. Proper advance notice is required before increasing the service fee under the general code. Remember: Tell clients about fee increases before implementing them.
Hint, shown before you answer in practice mode: Common mistake: Assuming a general right to charge fees allows unannounced increases. Think about what clients need before a charge changes.
III-A-048mediumapplication
Q4An intermediary receives a dividend on behalf of a client. What should it do with the amount?
Option A. Hold it until a new product is purchased
Why it is wrong: A new product purchase is not a valid condition for releasing the entitlement.
Option B. Treat it as the intermediary’s trading income
Why it is wrong: Client income does not become the intermediary’s trading revenue.
Option C. Release it only after the client complains
Why it is wrong: The code does not make a complaint necessary before disbursal.
Option D. Disburse the client’s entitlement promptly — Correct answer
Answer: D. The intermediary must promptly disburse income collected on behalf of the client. Remember: Income collected for clients must reach them promptly.
Hint, shown before you answer in practice mode: Common mistake: Treating client entitlements as discretionary retention balances. Identify whose money has been collected.
III-A-049mediumapplication
Q5A law requires an intermediary to disclose specified client records to a competent authority. The client objects. What should the intermediary do?
Option A. Withhold every record until the client agrees
Why it is wrong: Client refusal cannot defeat a mandatory lawful disclosure.
Option B. Publish the complete client file for everyone
Why it is wrong: A limited legal requirement does not justify public disclosure of the entire file.
Option C. Make the disclosure required by law — Correct answer
Option D. Destroy the records to preserve confidentiality
Why it is wrong: Destruction would obstruct rather than fulfil the obligation.
Answer: C. The required lawful disclosure must be made because confidentiality does not override a legal reporting obligation. Remember: Protect confidentiality while meeting specific lawful disclosure duties.
Hint, shown before you answer in practice mode: Common mistake: Treating client confidentiality as an absolute bar to regulatory access. Consider the legal exception to the confidentiality duty.
III-A-050mediumapplication
Q6A salesperson claims the intermediary has regulatory approval for guaranteed profits when no such approval exists. Which duty is breached?
Option A. The duty to give advance notice of fee changes
Why it is wrong: No change in an existing service fee is described.
Option B. The duty to avoid misleading representations — Correct answer
Option C. The duty to segregate client securities
Why it is wrong: No mixing of client securities is described.
Option D. The duty to reconcile settlement balances
Why it is wrong: The issue is a false representation rather than a settlement reconciliation error.
Answer: B. The claim breaches the duty to avoid misleading representations and exaggerated capability claims. Remember: Registration is not approval of profit promises or service claims.
Hint, shown before you answer in practice mode: Common mistake: Presenting a registration certificate as an endorsement of investment outcomes. Assess the truth of the claimed regulatory endorsement.
III-A-051mediumapplication
Q7An authorised inspection seeks relevant records kept by the intermediary. Which response is consistent with its inspection obligations?
Option A. Provide only the records showing profitable clients
Why it is wrong: Selective production can conceal relevant evidence.
Option B. Withhold records until every client consents
Why it is wrong: Mandatory inspection access does not generally depend on every client’s consent.
Option C. Provide the required records and reasonable assistance — Correct answer
Option D. Replace missing evidence with backdated entries
Why it is wrong: Backdated fabrication is not a substitute for genuine records.
Answer: C. The intermediary must provide the required records and assistance to the authorised inspection. Remember: Inspection cooperation requires accurate and complete evidence.
Hint, shown before you answer in practice mode: Common mistake: Assuming adverse or unflattering records may be excluded. Think about preserving the inspection’s ability to establish facts.
III-A-052mediumapplication
Q8An intermediary discloses a conflict of interest but takes no steps to resolve an unfair effect on a client. Is disclosure alone enough?
Option A. Yes, disclosure automatically permits any resulting harm
Why it is wrong: Disclosure does not create permission to harm the client.
Option B. No, the conflict also needs appropriate management — Correct answer
Option C. Yes, unless the client is a large institution
Why it is wrong: The obligation does not disappear merely because of client size.
Option D. No, because disclosure itself is always prohibited
Why it is wrong: The code requires appropriate disclosure rather than universally prohibiting it.
Answer: B. Disclosure alone is insufficient because the code also requires appropriate conflict avoidance or equitable resolution measures. Remember: Manage conflicts as well as disclosing them.
Hint, shown before you answer in practice mode: Common mistake: Treating a standard conflict disclaimer as a complete solution. Distinguish informing the client from dealing fairly with the conflict.
III-A-053hardapplication
Q9An intermediary’s registration is cancelled, and SEBI orders an orderly transfer of existing client work. What is the compliant course?
Option A. Accept new assignments to finance the transfer
Why it is wrong: A transfer process does not automatically authorise new regulated assignments.
Option B. Destroy records after announcing the cancellation
Why it is wrong: Record destruction can violate preservation and transfer duties.
Option C. Follow the transfer directions and cease unauthorised activity — Correct answer
Option D. Treat existing liabilities as automatically extinguished
Why it is wrong: Cancellation does not automatically erase liabilities already incurred.
Answer: C. The intermediary must follow the protective directions and cannot use the wind-down to continue unauthorised business. Remember: Cancellation requires an orderly client-protective exit, not abandonment of obligations.
Hint, shown before you answer in practice mode: Common mistake: Assuming loss of registration also removes responsibility for existing clients. Separate winding down existing obligations from taking on new regulated business.
III-A-054hardapplication
SEBI (Intermediaries) Regulations, 2008: common questions
How many practice questions are there on SEBI (Intermediaries) Regulations, 2008?
9 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 (Intermediaries) Regulations, 2008?
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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