SEBI (Prohibition of Insider Trading) Regulations, 2015
9 questions. Each answer is explained.
Question 1 of 9Practice · Series III-A — Securities Intermediaries Compliance (Non-Fund)
0 right · 0 wrong · 9 to go
A–D or 1–4 to answer · Enter or → for the next question · ← to go back
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 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 (Prohibition of Insider Trading) Regulations, 2015, with answers
Q1Can a person outside a listed company be an insider under the insider-trading regulations?
Option A. Yes, possessing or accessing such information can qualify — Correct answer
Option B. No, only people currently employed by the company qualify
Why it is wrong: The insider definition is not restricted to current employees.
Option C. No, only registered shareholders with voting rights qualify
Why it is wrong: Shareholding is not necessary for the possession-or-access limb of the definition.
Option D. Yes, but only after becoming a director of the company
Why it is wrong: A board appointment is not necessary for that limb of the definition.
Answer: A. An outsider can be an insider through possession of or access to unpublished price-sensitive information. Remember: Insider status can arise from information access, not merely employment.
Hint, shown before you answer in practice mode: Common mistake: Assuming an external adviser is automatically outside insider-trading law. Consider the information-based route in the definition.
III-A-055easyregulatory
Q2Which information most clearly fits unpublished price-sensitive information before public disclosure?
Option A. A confidential decision on a materially significant merger — Correct answer
Option B. An exchange-published annual report available to everyone
Why it is wrong: An already public annual report is not unpublished merely because some investors have not read it.
Option C. A widely available explanation of bond coupons
Why it is wrong: A general coupon explanation is not issuer-specific confidential price-sensitive information.
Option D. A published exchange trading-holiday calendar
Why it is wrong: A public holiday calendar lacks the described confidentiality and issuer-price significance.
Answer: A. A confidential materially significant merger decision can be unpublished price-sensitive information because it is not public and can affect price. Remember: UPSI combines non-public information with material price significance.
Hint, shown before you answer in practice mode: Common mistake: Treating every piece of financial information as UPSI. Check both public availability and likely material price impact.
III-A-056easyconceptual
Q3An adviser needs confidential merger information for genuine due diligence. Which approach is appropriate before sharing unpublished price-sensitive information?
Option A. Share the full file with every employee automatically
Why it is wrong: A legitimate assignment does not justify unlimited employee access.
Option B. Limit sharing to the legitimate purpose with required safeguards — Correct answer
Option C. Allow trading because the project has a business purpose
Why it is wrong: Lawful access does not itself authorise trading while in possession of UPSI.
Option D. Post the information in an unrestricted discussion group
Why it is wrong: Unrestricted circulation is not controlled need-based sharing.
Answer: B. Necessary sharing for a legitimate purpose must follow the applicable confidentiality and information-control safeguards. Remember: A legitimate purpose permits controlled use, not unrestricted dissemination or trading.
Hint, shown before you answer in practice mode: Common mistake: Assuming legitimate access makes every subsequent use lawful. A lawful purpose for sharing does not remove the need for controls.
III-A-057mediumapplication
Q4Research staff do not need confidential deal information. Which internal arrangement best restricts its flow from the deal team?
Option A. An information barrier with controlled access — Correct answer
Option B. An unrestricted shared folder for both teams
Why it is wrong: An unrestricted folder increases access rather than restricting it.
Option C. A common chat group containing every deal update
Why it is wrong: A common update group distributes the information across the barrier.
Option D. A promise that staff will ignore the information
Why it is wrong: A promise to ignore information does not prevent possession or access.
Answer: A. An information barrier restricts unnecessary access and communication between teams handling different responsibilities. Remember: Information barriers require practical access and communication controls.
Hint, shown before you answer in practice mode: Common mistake: Treating a policy statement alone as an effective information barrier. Think about separating access in practice, not merely asking people to be careful.
III-A-058mediumapplication
Q5How must the structured digital database required for unpublished price-sensitive information generally be maintained?
Option A. Only by an outside provider with no internal record
Why it is wrong: The regulation states that this database must not be outsourced.
Option B. As editable notes without timestamps or change history
Why it is wrong: Untracked editing fails the required integrity safeguards.
Option C. Only after SEBI starts a formal investigation
Why it is wrong: Maintaining the database is not conditional on an investigation starting.
Option D. Internally, with prescribed access safeguards and audit trails — Correct answer
Answer: D. The required database must be maintained internally and must preserve integrity through measures such as timestamps and audit trails. Remember: The UPSI database must be reliable, traceable and internally maintained.
Hint, shown before you answer in practice mode: Common mistake: Confusing a casually maintained contact list with the statutory database. Recall the specific record’s responsibility and integrity requirements.
III-A-059mediumregulatory
Q6What is the minimum ordinary retention period for the structured digital database after completion of the relevant transactions?
Option A. 8 years — Correct answer
Option B. 3 years
Why it is wrong: Three years is below this database’s statutory minimum.
Option C. 5 years
Why it is wrong: Five years confuses this requirement with some other record-retention duties.
Option D. 10 years
Why it is wrong: Ten years is not the ordinary minimum specified in regulation 3(6).
Answer: A. The ordinary minimum is eight years after completion of the relevant transactions, with longer preservation when an investigation requires it. Remember: Different regulatory records can have different retention periods and starting points.
Hint, shown before you answer in practice mode: Common mistake: Using a general retention policy without checking the specific UPSI requirement. Recall the retention rule specific to the UPSI database, not general client records.
III-A-060mediumregulatory
Q7A designated person possesses unpublished price-sensitive information while the trading window is open. No exception applies. May the person trade?
Option A. Yes, the open window removes all information-based restrictions
Why it is wrong: An open window does not remove the prohibition on trading while possessing such information.
Option B. Yes, an ordinary pre-clearance automatically permits the trade
Why it is wrong: Routine pre-clearance is not itself a statutory defence to trading while possessing such information.
Option C. No, the information-based prohibition still applies — Correct answer
Option D. Yes, using a different broker removes the restriction
Why it is wrong: Changing the executing broker does not cure the prohibition.
Answer: C. The person must not trade because an open window does not override the UPSI possession restriction. Remember: Trading-window permission is not a defence to trading while possessing UPSI.
Hint, shown before you answer in practice mode: Common mistake: Treating an open window as complete legal clearance. Distinguish an internal trading window from the substantive legal prohibition.
III-A-061mediumapplication
Q8A person knowingly trades while possessing unpublished price-sensitive information and ultimately loses money. No statutory defence or exception applies. What follows?
Option A. A loss alone does not remove the trading violation — Correct answer
Option B. A loss automatically proves that the trade was lawful
Why it is wrong: The outcome does not establish that the possession-based restriction was satisfied.
Option C. Only profitable trades can breach the regulations
Why it is wrong: The regulation does not restrict liability solely to profitable transactions.
Option D. A loss turns unpublished information into public information
Why it is wrong: Trading results do not change whether information was generally available.
Answer: A. A loss alone does not defeat the prohibition because the rule is not limited to profitable trades. Remember: Assess the information and circumstances when trading, not only the eventual profit.
Hint, shown before you answer in practice mode: Common mistake: Assuming an unsuccessful trade cannot constitute insider trading. Ask whether the prohibition depends on the eventual investment result.
III-A-062hardapplication
Q9The ordinary retention period for an unpublished price-sensitive information database has expired. SEBI has notified an ongoing investigation involving it. What should happen?
Option A. Preserve the relevant information until the investigation is completed — Correct answer
Option B. Delete it immediately because the ordinary retention period ended
Why it is wrong: Expiry of the ordinary period does not override the investigation-preservation requirement.
Option C. Retain only entries that support the firm’s explanation
Why it is wrong: Selective retention could remove relevant evidence.
Option D. Replace the database with an unsigned summary
Why it is wrong: An unsigned summary does not preserve the original database information.
Answer: A. The relevant database information must be preserved until completion of the notified investigation. Remember: An investigation hold can extend ordinary record retention.
Hint, shown before you answer in practice mode: Common mistake: Running automatic deletion without checking legal holds. Look for the preservation requirement triggered by an investigation notice.
III-A-063hardapplication
SEBI (Prohibition of Insider Trading) Regulations, 2015: common questions
How many practice questions are there on SEBI (Prohibition of Insider Trading) Regulations, 2015?
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 (Prohibition of Insider Trading) Regulations, 2015?
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.
SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003
9 questions on SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003. Its quiz opens on that unit.
Open SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003Paper Trading Try it on the practice trading desk