Securities and Exchange Board of India Act, 1992
11 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
- Regulatory Framework – General View14
- Introduction to Compliance6
- 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 11 questions on Securities and Exchange Board of India Act, 1992, with answers
Q1Which SEBI Act section generally requires specified securities intermediaries to obtain a registration certificate?
Option A. Section 12 — Correct answer
Option B. Section 15T
Why it is wrong: Section 15T concerns appeals to SAT.
Option C. Section 15Z
Why it is wrong: Section 15Z concerns appeals to the Supreme Court.
Option D. Section 30
Why it is wrong: Section 30 concerns SEBI’s power to make regulations.
Answer: A. Section 12 establishes the registration requirement for the specified intermediary activities. Remember: Identify the legal registration requirement before starting a regulated activity.
Hint, shown before you answer in practice mode: Common mistake: Mistaking a business incorporation certificate for securities-market registration. Separate entry into regulated business from appeals and rule-making.
III-A-029easyregulatory
Q2Under the SEBI Act, which body has the power to make regulations consistent with the Act?
Option A. The Securities Appellate Tribunal
Why it is wrong: SAT’s appellate role does not confer SEBI’s regulation-making power.
Option B. SEBI — Correct answer
Option C. The Registrar of Companies
Why it is wrong: The Registrar of Companies does not exercise this power under section 30.
Option D. The National Company Law Tribunal
Why it is wrong: The company-law tribunal does not make SEBI regulations under section 30.
Answer: B. SEBI can make regulations under section 30, consistently with the Act and rules made under it. Remember: Regulatory powers must come from legislation.
Hint, shown before you answer in practice mode: Common mistake: Equating an industry recommendation with a statutory regulation. Recall the difference between statutory regulation and private policy.
III-A-030easyregulatory
Q3Where must sums realised as penalties under the SEBI Act be credited?
Option A. The Consolidated Fund of India — Correct answer
Option B. The Securities and Exchange Board of India General Fund
Why it is wrong: Section 15JA specifies the Consolidated Fund of India rather than SEBI’s own fund.
Option C. The relevant exchange’s Investor Protection Fund
Why it is wrong: A statutory penalty is not automatically credited to an exchange investor-protection fund.
Option D. The relevant clearing corporation’s Settlement Guarantee Fund
Why it is wrong: A settlement-guarantee fund is not the destination specified by section 15JA.
Answer: A. Section 15JA directs realised penalties to the Consolidated Fund of India. Remember: A statutory penalty is not automatically a direct investor compensation payment.
Hint, shown before you answer in practice mode: Common mistake: Assuming every fine is distributed directly to the complainant. Distinguish a statutory penalty from compensation paid directly to an investor.
III-A-031easyregulatory
Q4SEBI requires a person to surrender an unlawful trading gain. Which concept best describes taking away that gain?
Option A. Disgorgement — Correct answer
Option B. Compensation for a client’s loss
Why it is wrong: Compensation addresses the recipient’s loss rather than describing surrender of the wrongdoer’s gain.
Option C. Interest on an unpaid contractual debt
Why it is wrong: Debt interest is a contractual payment rather than the removal of unlawful trading gains.
Option D. A subscription refund after non-allotment
Why it is wrong: A subscription refund returns application money rather than an unlawful trading gain.
Answer: A. Disgorgement removes an unlawful gain or loss avoided through a contravention. Remember: Disgorgement targets the benefit obtained from wrongdoing.
Hint, shown before you answer in practice mode: Common mistake: Treating disgorgement and a separately imposed monetary penalty as identical. Focus on removing a benefit obtained through wrongdoing.
III-A-032mediumapplication
Q5Which factor is expressly relevant when determining a monetary penalty under section 15J?
Option A. The age of the intermediary’s registration
Why it is wrong: Registration age is not one of section 15J’s expressly listed factors.
Option B. The size of its authorised share capital
Why it is wrong: Authorised capital is not one of section 15J’s expressly listed factors.
Option C. The number of branches operated by the firm
Why it is wrong: Branch count is not one of section 15J’s expressly listed factors.
Option D. The repetitive nature of the default — Correct answer
Answer: D. Repetition is an express section 15J factor, alongside quantifiable unfair gain and investor loss. Remember: Penalty assessment considers the consequences and repetitive nature of a default.
Hint, shown before you answer in practice mode: Common mistake: Assuming every breach receives an identical penalty without context. Look for a factor connected to the seriousness and history of the breach.
III-A-033mediumregulatory
Q6Which provision permits SEBI to investigate suspected securities-market violations through an investigating authority?
Option A. Section 15JA
Why it is wrong: Section 15JA concerns the destination of realised penalties.
Option B. Section 11C — Correct answer
Option C. Section 15Z
Why it is wrong: Section 15Z concerns Supreme Court appeals.
Option D. Section 14
Why it is wrong: Section 14 concerns the SEBI General Fund.
Answer: B. Section 11C provides the statutory investigation framework for suspected securities-market violations. Remember: Investigation, adjudication and appeal are distinct legal functions.
Hint, shown before you answer in practice mode: Common mistake: Using an appeal provision as authority for an investigation. Distinguish investigation powers from funding and appeal provisions.
III-A-034mediumregulatory
Q7What is the ordinary section 15T appeal period to the Securities Appellate Tribunal after receiving the relevant order?
Option A. 15 days
Why it is wrong: 15 days is not the ordinary period in section 15T.
Option B. 45 days — Correct answer
Option C. 30 days
Why it is wrong: 30 days is not the ordinary period in section 15T.
Option D. 90 days
Why it is wrong: 90 days is not the ordinary period in section 15T.
Answer: B. The ordinary period is 45 days from receipt of the order, with delayed admission possible on sufficient cause. Remember: Check both the appeal deadline and the provision on condoning delay.
Hint, shown before you answer in practice mode: Common mistake: Counting from an unrelated press report rather than receipt of the order. Recall the statutory appeal period, not the period for a different tribunal process.
III-A-035mediumregulatory
Q8An appeal from the Securities Appellate Tribunal under section 15Z must raise what issue before the Supreme Court?
Option A. A question of law arising from SAT’s order — Correct answer
Option B. A fresh factual complaint never raised in the proceedings
Why it is wrong: Section 15Z concerns a legal question arising from the tribunal’s order, not a new unrelated complaint.
Option C. A routine rehearing of facts without any legal question
Why it is wrong: A factual disagreement alone does not meet the stated question-of-law requirement.
Option D. An appeal directly against a broker’s contract note
Why it is wrong: Section 15Z is not a direct appeal route from a broker’s contract note.
Answer: A. Section 15Z provides an appeal on a question of law arising from the SAT decision or order. Remember: A further appeal is governed by its own statutory grounds.
Hint, shown before you answer in practice mode: Common mistake: Assuming every dissatisfaction automatically qualifies for Supreme Court appeal. Focus on the statutory ground for this further appeal.
III-A-036mediumregulatory
Q9Who may SEBI appoint under section 15-I to inquire into specified defaults and adjudge monetary penalties?
Option A. An investigating authority under section 11C
Why it is wrong: An investigating authority gathers and examines evidence rather than exercising this distinct adjudication role.
Option B. A presiding officer of the Securities Appellate Tribunal
Why it is wrong: SAT hears appeals rather than serving as the adjudicating officer appointed under section 15-I.
Option C. An adjudicating officer — Correct answer
Option D. An exchange-appointed client arbitrator
Why it is wrong: An exchange arbitrator does not impose these statutory penalties under section 15-I.
Answer: C. SEBI appoints an adjudicating officer under section 15-I for the specified penalty inquiry. Remember: Monetary-penalty adjudication requires a properly authorised statutory process.
Hint, shown before you answer in practice mode: Common mistake: Assuming the complainant or a market intermediary imposes statutory penalties. Identify the statutory officer responsible for adjudication.
III-A-037mediumregulatory
Q10A person argues that paying an administrative penalty automatically rules out prosecution for the same contravention. What does section 24 indicate?
Option A. Prosecution is not automatically excluded by the penalty — Correct answer
Option B. Payment always creates complete criminal immunity
Why it is wrong: The Act does not create universal criminal immunity merely on payment.
Option C. Only the investor can permit a prosecution
Why it is wrong: An investor’s permission is not the statutory condition stated here.
Option D. Prosecution requires cancellation of every client account
Why it is wrong: Universal client-account cancellation is not the statutory prerequisite.
Answer: A. Section 24 operates without prejudice to the specified monetary-penalty powers, so payment does not automatically exclude prosecution. Remember: Different enforcement consequences may coexist under the Act.
Hint, shown before you answer in practice mode: Common mistake: Assuming a monetary payment settles every possible legal consequence. Consider the Act’s distinction between administrative penalties and offences.
III-A-038hardapplication
Q11SEBI seeks a direction to protect investors and prevent an intermediary’s affairs from harming them. Which section specifically provides this direction-making power?
Option A. Section 15JA
Why it is wrong: Section 15JA concerns where penalty receipts are credited.
Option B. Section 15K
Why it is wrong: Section 15K concerns establishment of the appellate tribunal.
Option C. Section 11B — Correct answer
Option D. Section 18
Why it is wrong: Section 18 concerns SEBI’s returns and reports to the Central Government.
Answer: C. Section 11B provides the relevant power to issue directions in the interests of investors and the securities market. Remember: Protective directions and monetary penalties are different regulatory tools.
Hint, shown before you answer in practice mode: Common mistake: Assuming the regulator can act only by imposing a fine. Match the protective direction to the relevant statutory power.
III-A-039hardapplication
Securities and Exchange Board of India Act, 1992: common questions
How many practice questions are there on Securities and Exchange Board of India Act, 1992?
11 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 Securities and Exchange Board of India Act, 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.
Securities Contracts (Regulation) Act, 1956 and Rules, 1957
6 questions on Securities Contracts (Regulation) Act, 1956 and Rules, 1957. Its quiz opens on that unit.
Open Securities Contracts (Regulation) Act, 1956 and Rules, 1957Paper Trading Try it on the practice trading desk