Securities Contracts (Regulation) Act, 1956 and Rules, 1957
6 questions. Each answer is explained.
Question 1 of 6Practice · 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
- 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 6 questions on Securities Contracts (Regulation) Act, 1956 and Rules, 1957, with answers
Q1Under the Securities Contracts (Regulation) Act, which instrument is included in the definition of securities?
Option A. An ordinary bank fixed-deposit receipt
Why it is wrong: An ordinary bank fixed-deposit receipt is not the marketable company debenture identified in the statutory securities definition.
Option B. A marketable company debenture — Correct answer
Option C. An ordinary life-insurance policy
Why it is wrong: An ordinary life-insurance policy is an insurance contract, not the security described here.
Option D. An ordinary commercial sale invoice
Why it is wrong: A commercial sale invoice records a sale rather than representing a marketable company security.
Answer: B. A marketable company debenture falls within the Act’s definition of securities. Remember: The legal definition determines whether an instrument is a security.
Hint, shown before you answer in practice mode: Common mistake: Assuming every document involving money is a security. Look for a recognised financial instrument rather than a payment or service document.
III-A-040easyregulatory
Q2What does a securities option ordinarily give its buyer, subject to the contract’s terms?
Option A. An obligation to exercise whenever the seller requests
Why it is wrong: The buyer holds the exercise choice, subject to the option’s terms.
Option B. A right to exercise without paying the agreed premium
Why it is wrong: The exercise right does not remove the agreed premium obligation.
Option C. A right, not an obligation, to exercise — Correct answer
Option D. An entitlement to a fixed coupon from the exchange
Why it is wrong: An option does not ordinarily provide an exchange-paid fixed coupon.
Answer: C. An option buyer has an exercise right rather than an unconditional obligation to exercise. Remember: The option buyer’s right differs from the writer’s corresponding obligation.
Hint, shown before you answer in practice mode: Common mistake: Assuming an option buyer must exercise an unfavourable contract. Distinguish the buyer’s position from a compulsory forward commitment.
III-A-041easyconceptual
Q3Which arrangement is expressly addressed by section 18A of the Securities Contracts (Regulation) Act?
Option A. Recognition of stock exchanges by the Government
Why it is wrong: Exchange recognition is addressed elsewhere, not by the derivative-validity provision in section 18A.
Option B. Compliance with conditions of a listing agreement
Why it is wrong: Listing-agreement compliance is addressed by section 21.
Option C. Maintenance of beneficial-owner records by depositories
Why it is wrong: Beneficial-owner recordkeeping belongs to the depository framework, not this provision.
Option D. Validity of qualifying derivative contracts — Correct answer
Answer: D. Section 18A addresses the legality and validity of derivatives meeting its specified conditions. Remember: A derivative’s legal validity depends on the applicable statutory framework.
Hint, shown before you answer in practice mode: Common mistake: Assuming every privately described derivative has identical statutory treatment. Recall the section dealing with contracts in derivatives.
III-A-042mediumregulatory
Q4Under section 21 of the Securities Contracts (Regulation) Act, a listed person must comply with what?
Option A. Only the issuer’s informal investor promises
Why it is wrong: Informal promises do not replace the applicable listing conditions.
Option B. Only the underwriting commission agreement
Why it is wrong: An underwriting contract is different from the listing agreement.
Option C. Only the broker’s internal dealing policy
Why it is wrong: A broker’s internal policy does not discharge the listed person’s listing obligations.
Option D. The conditions of the applicable listing agreement — Correct answer
Answer: D. Section 21 requires compliance with the listing-agreement conditions where securities are listed on an application. Remember: Listing brings obligations rather than merely access to exchange trading.
Hint, shown before you answer in practice mode: Common mistake: Treating listing approval as the end of the issuer’s compliance duties. Connect admission to exchange listing with the issuer’s continuing obligations.
III-A-043mediumregulatory
Q5An ordinary physical-securities contract between parties in one town provides for delivery and full payment on the next day. Which statutory description best fits?
Option A. A contract requiring monthly settlement
Why it is wrong: The agreed delivery and payment do not wait until month-end.
Option B. A spot delivery contract — Correct answer
Option C. A contract requiring annual settlement
Why it is wrong: Nothing in the contract defers settlement for a year.
Option D. A cash-settled futures contract
Why it is wrong: The case describes physical delivery rather than cash settlement of futures.
Answer: B. The stated arrangement fits the next-day delivery-and-payment limb of the spot delivery definition. Remember: The statutory spot-delivery definition is not limited to same-day performance.
Hint, shown before you answer in practice mode: Common mistake: Confusing the SCRA definition with a separate exchange settlement convention. Use the statutory meaning, not a colloquial meaning of instant payment.
III-A-044mediumapplication
Q6An ordinary physical-share sale between parties in one town specifies next-day delivery but payment after thirty days. No exception applies. Is this spot delivery?
Option A. No, the payment timing fails the stated requirement — Correct answer
Option B. Yes, because delivery alone is on the next day
Why it is wrong: Next-day delivery alone does not satisfy the payment requirement.
Option C. Yes, because both parties signed the contract
Why it is wrong: A signature cannot change the statutory timing test.
Option D. Yes, because payment is due within one year
Why it is wrong: A one-year payment test is not the rule in this provision.
Answer: A. It is not spot delivery on these facts because the statutory limb requires timely payment as well as delivery. Remember: Test both delivery and payment when applying the spot-delivery definition.
Hint, shown before you answer in practice mode: Common mistake: Checking the delivery date but ignoring the payment date. Check both legs of settlement rather than only the security movement.
III-A-045hardapplication
Securities Contracts (Regulation) Act, 1956 and Rules, 1957: common questions
How many practice questions are there on Securities Contracts (Regulation) Act, 1956 and Rules, 1957?
6 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 Contracts (Regulation) Act, 1956 and Rules, 1957?
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 (Intermediaries) Regulations, 2008
9 questions on SEBI (Intermediaries) Regulations, 2008. Its quiz opens on that unit.
Open SEBI (Intermediaries) Regulations, 2008Paper Trading Try it on the practice trading desk