SEBI (Stock Brokers) Regulations, 1992
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 (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 (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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 (Stock Brokers) Regulations, 1992, with answers
Q1Which document must a stock broker issue to the client for an executed securities transaction in the prescribed form?
Option A. A public issue prospectus
Why it is wrong: A prospectus relates to a securities issue rather than an executed brokerage trade.
Option B. A debenture trust deed
Why it is wrong: A trust deed documents debenture-trust arrangements rather than a brokerage trade.
Option C. A contract note — Correct answer
Option D. A credit-rating rationale
Why it is wrong: A rating rationale explains a credit opinion rather than confirming trade execution.
Answer: C. The broker must issue a contract note for the client’s transaction within the specified timeline. Remember: A contract note is a key record for checking an executed trade.
Hint, shown before you answer in practice mode: Common mistake: Treating a price alert or market message as the formal trade document. Recall the formal client record of an executed trade.
III-A-092easyregulatory
Q2Which alternative investment fund category covers funds employing diverse or complex trading strategies that may use permitted leverage?
Option A. Category III — Correct answer
Option B. Category I only
Why it is wrong: Category I is not the category defined by this complex trading-strategy description.
Option C. Category II only
Why it is wrong: Category II is not the category defined by this leveraged trading-strategy description.
Option D. A separate Category IV
Why it is wrong: The AIF category structure does not include the proposed Category IV.
Answer: A. Category III covers such trading strategies and may employ leverage subject to applicable conditions. Remember: AIF category is linked to the fund’s regulatory characteristics and strategy.
Hint, shown before you answer in practice mode: Common mistake: Confusing AIF categories with the separate FPI categories. Match the category to the fund’s trading approach rather than its name.
III-A-093easyconceptual
Q3A client gives a buy limit of ₹250. The market is ₹253 and no execution has occurred. What should the broker do?
Option A. Execute at ₹253 because the price difference is small
Why it is wrong: A small difference does not remove the client’s price limit.
Option B. Report execution at ₹250 without an actual fill
Why it is wrong: Reporting a nonexistent execution would misstate the trade.
Option C. Convert the order to market without authorisation
Why it is wrong: Unilateral conversion disregards the client’s instruction.
Option D. Respect the limit or obtain a revised instruction — Correct answer
Answer: D. The broker must respect the limit and cannot unilaterally replace it with a higher authorised price. Remember: Execute within the client’s authorised terms rather than making unauthorised changes.
Hint, shown before you answer in practice mode: Common mistake: Treating a moving market as permission to override an order limit. The client’s price instruction remains important when the market moves.
III-A-094mediumapplication
Q4Under the 2026 Stock Brokers Regulations, within what period must a broker take adequate grievance-redressal steps after receipt?
Option A. 7 trading days from receipt
Why it is wrong: Seven trading days is not the period stated in this condition.
Option B. 21 calendar days from receipt — Correct answer
Option C. 30 trading days from receipt
Why it is wrong: Thirty trading days substitutes both the wrong count and day type.
Option D. 90 calendar days from receipt
Why it is wrong: Ninety calendar days exceeds the stated period.
Answer: B. The registration condition requires adequate redressal steps within 21 calendar days from receipt of the grievance. Remember: A compliance deadline must preserve the exact day count and day type.
Hint, shown before you answer in practice mode: Common mistake: Replacing calendar days with trading days in a grievance deadline. Check both the number of days and whether they are calendar or trading days.
III-A-095mediumregulatory
Q5For an illustrative trade, required margin is ₹48,000 and eligible collateral is ₹35,000. What additional eligible margin is needed?
Option A. ₹13,000 — Correct answer
Option B. ₹83,000
Why it is wrong: ₹83,000 adds the requirement and collateral instead of finding the shortfall.
Option C. ₹35,000
Why it is wrong: ₹35,000 is the collateral already available.
Option D. ₹48,000
Why it is wrong: ₹48,000 ignores the eligible collateral already provided.
Answer: A. The shortfall is ₹13,000. Additional eligible margin = ₹48,000 − ₹35,000 = ₹13,000. The supplied margin amounts are assumptions, not a prescribed market-wide margin rate. Remember: A margin shortfall is the uncovered part of the requirement.
Hint, shown before you answer in practice mode: Common mistake: Asking for the entire requirement again instead of calculating the remaining shortfall. Compare the requirement with the eligible amount already available.
III-A-096mediumnumerical
Q6A portfolio manager selects investments using discretion granted in the client agreement. Which service arrangement is described?
Option A. Discretionary portfolio management — Correct answer
Option B. Non-discretionary execution of each client decision
Why it is wrong: Non-discretionary management follows client decisions rather than the described manager discretion.
Option C. A depository’s basic safekeeping service
Why it is wrong: Safekeeping alone does not confer investment-selection authority.
Option D. An issuer’s share-allotment service
Why it is wrong: Share allotment concerns an issuer’s issue process rather than ongoing portfolio decisions.
Answer: A. This is discretionary portfolio management because the agreement permits the manager to make investment decisions for the client. Remember: A portfolio manager’s discretion comes from the agreed mandate and applicable law.
Hint, shown before you answer in practice mode: Common mistake: Assuming every portfolio-management arrangement gives identical decision-making authority. Identify who is authorised to make the investment decisions.
III-A-097mediumapplication
Q7A broker’s records show a trade, but the client disputes giving the order. What evidence should the review prioritise?
Option A. The client’s profit or loss on that trade
Why it is wrong: A trade’s outcome does not prove that it was authorised.
Option B. The retained order instructions and execution trail — Correct answer
Option C. The dealer’s recollection without supporting records
Why it is wrong: An unsupported recollection is weaker than the retained instruction and execution evidence.
Option D. The client’s history of trading similar securities
Why it is wrong: Past trading in similar securities does not by itself authorise this particular order.
Answer: B. The order and execution trail should be examined to establish authorisation and what was actually executed. Remember: Trade reviews need a traceable link between instruction and execution.
Hint, shown before you answer in practice mode: Common mistake: Assuming a profitable trade cannot be unauthorised. Look for evidence connecting client authority to the specific execution.
III-A-098mediumapplication
Q8Illustrative collateral worth ₹80,000 has an assumed 15% haircut. Add ₹12,000 eligible cash against ₹90,000 margin required. What is the shortfall?
Option A. ₹2,000
Why it is wrong: ₹2,000 treats gross collateral as fully eligible and produces a surplus rather than the actual shortfall.
Option B. ₹10,000 — Correct answer
Option C. ₹22,000
Why it is wrong: ₹22,000 ignores the eligible cash amount.
Option D. ₹78,000
Why it is wrong: ₹78,000 deducts only the cash while ignoring eligible non-cash collateral.
Answer: B. The shortfall is ₹10,000. Eligible non-cash collateral = ₹80,000 × 85% = ₹68,000. Total eligible amount = ₹68,000 + ₹12,000 = ₹80,000. Shortfall = ₹90,000 − ₹80,000 = ₹10,000. The haircut and full cash eligibility are scenario assumptions. Remember: Apply the assumed haircut before assessing available margin.
Hint, shown before you answer in practice mode: Common mistake: Using gross collateral value instead of the eligible value after haircut. Adjust the non-cash collateral before adding cash and comparing with the requirement.
III-A-099hardnumerical
Q9A broker cannot execute a client’s order within its instructions. It records a fictitious fill to avoid a complaint. Which action was required instead?
Option A. Inform the client accurately about non-execution — Correct answer
Option B. Record a fill at the client’s desired price
Why it is wrong: A fictitious fill misrepresents what occurred.
Option C. Use a different client’s trade as a substitute
Why it is wrong: Another client’s trade cannot simply be reassigned to conceal non-execution.
Option D. Alter the instruction after the trading session
Why it is wrong: Changing an instruction afterwards does not create prior authority or a genuine fill.
Answer: A. The broker should accurately inform the client of non-execution rather than invent or reassign an execution. Remember: An unfilled order must be reported truthfully rather than concealed.
Hint, shown before you answer in practice mode: Common mistake: Trying to solve an execution problem by creating a false trade record. Distinguish service failure from falsifying the evidence of service.
III-A-100hardapplication
SEBI (Stock Brokers) Regulations, 1992: common questions
How many practice questions are there on SEBI (Stock Brokers) Regulations, 1992?
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 (Stock Brokers) Regulations, 1992?
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 (Merchant Bankers) Regulations 1992, etc.
9 questions on SEBI (Merchant Bankers) Regulations 1992, etc.. Its quiz opens on that unit.
Open SEBI (Merchant Bankers) Regulations 1992, etc.Paper Trading Try it on the practice trading desk