Introduction to Securities Broking Operations
23 questions. Each answer is explained.
Question 1 of 10Practice · Series VII — Securities Operations and Risk Management
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More units in NISM Series VII
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 50% · 50 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 VII Securities Operations and Risk Management
Exam rules read on NISM's site on 3 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 3 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 23 questions on Introduction to Securities Broking Operations, with answers
Q1Which sequence shows the basic securities trade life cycle in the correct order?
Option A. Order placement → clearing → execution → settlement
Why it is wrong: It puts clearing before a trade has been executed.
Option B. Order placement → execution → clearing → settlement — Correct answer
Option C. Execution → order placement → settlement → clearing
Why it is wrong: It places execution before the order and clearing after settlement.
Option D. Order placement → execution → settlement → clearing
Why it is wrong: It incorrectly puts settlement before the clearing stage.
Answer: B. Each stage follows the stage that supplies the information it needs. An order must exist before it can be executed. The executed trade is then processed for obligations through clearing. Settlement completes the relevant funds and securities transfers. Remember: Remember the sequence as instruction, trade, obligation and transfer.
Hint, shown before you answer in practice mode: Common mistake: Using clearing and settlement as interchangeable words.
VII-011easyconceptual
Q2A broking firm monitors each client's trading exposure against available margin during market hours. This is primarily a:
Option A. Middle-office risk-management function — Correct answer
Option B. Front-office client-acquisition function
Why it is wrong: Client acquisition concerns bringing in business, not this ongoing exposure control.
Option C. Back-office financial-reporting function
Why it is wrong: Financial reporting records and reports information rather than being the primary intraday risk function.
Option D. Issuer investor-relations function
Why it is wrong: Issuer investor relations is not the broker control described.
Answer: A. Intraday exposure and margin surveillance fit the middle-office risk role. The activity compares risk already taken with the resources available to support it. Its purpose is risk control and surveillance. In the NISM functional classification, that belongs to the middle office. Remember: Identify the purpose of the activity before assigning its office classification.
Hint, shown before you answer in practice mode: Common mistake: Calling an activity front office merely because it happens while trading is open.
VII-012mediumapplication
Q3Within what period after execution should a client receive the contract note for an exchange trade?
Option A. 2 hours
Why it is wrong: Two hours is not the general contract-note limit tested here.
Option B. 7 calendar days
Why it is wrong: Seven days would go well beyond the stated period.
Option C. 48 hours
Why it is wrong: Forty-eight hours is longer than the stated requirement.
Option D. 24 hours — Correct answer
Answer: D. This is the period specified in the official investor instruction. A contract note records the executed trade and its relevant details. The official investor instruction requires receipt within 24 hours of the trade. This is a trade-document timeline, not a statement of the settlement cycle. Remember: Keep trade-confirmation deadlines separate from settlement deadlines.
Hint, shown before you answer in practice mode: Common mistake: Assuming that contract notes can wait until money and securities have completed settlement.
VII-013easyregulatory
Q4Why does a broker quote a client's Unique Client Code when entering that client's trade?
Option A. To identify the security issuer independently of the client
Why it is wrong: The issuer or security is not identified by the client's UCC.
Option B. To specify the clearing bank used by the exchange
Why it is wrong: A bank identifier is not the purpose of a client trading code.
Option C. To attribute the transaction to the correct registered client — Correct answer
Option D. To identify only the broker and not the underlying client
Why it is wrong: Identifying only the broker would not identify which client owns the trade.
Answer: C. The UCC supplies the required client-level attribution. A broker can execute trades for many different clients. Quoting the UCC connects the trade to the particular registered client. It is not a security code, bank code or a substitute for identifying the broker. Remember: Distinguish the code for the client from the code for the security or intermediary.
Hint, shown before you answer in practice mode: Common mistake: Treating UCC, a security identifier and a demat-account identifier as interchangeable.
VII-014mediumapplication
Q5A stop-loss sell order has a trigger price of ₹480 and a limit price of ₹477. From a price above ₹480, which event activates the order in the normal market?
Option A. The last traded price rises further above ₹480
Why it is wrong: An upward move from above the trigger does not meet the sell trigger condition.
Option B. The last traded price reaches ₹480 or moves below it — Correct answer
Option C. The best sell quote becomes ₹480 while the last traded price stays above it
Why it is wrong: The quoted offer alone is not the last-traded-price test stated by the exchange.
Option D. The best buy quote falls to ₹477 while the last traded price stays above ₹480
Why it is wrong: A quote at the limit price does not itself meet the last-traded-price trigger condition.
Answer: B. This meets the last-traded-price condition for activating the sell order. For a stop-loss sell order, compare the normal-market last traded price with the trigger. Reaching ₹480 or moving below it activates the order. The ₹477 limit still governs acceptable execution after activation, so activation alone does not establish that a trade occurs. Remember: For a sell stop, watch the trigger crossing downward. Then apply the released order's limit.
Hint, shown before you answer in practice mode: Common mistake: Confusing a trigger price with a guaranteed execution price.
VII-015mediumapplication
Q6A buy order for 1,000 shares at a limit of ₹120 is marked Immediate or Cancel. Only 600 shares are immediately available at or below ₹120. With no other matching orders, what happens?
Option A. All 1,000 remain pending until the market closes
Why it is wrong: IOC does not leave the order pending for the rest of the day.
Option B. All 1,000 are cancelled because a full match is unavailable
Why it is wrong: It imposes an all-or-nothing condition that IOC does not require.
Option C. 600 execute and 400 remain pending at the limit price
Why it is wrong: It recognises the partial execution but wrongly retains the unmatched quantity.
Option D. 600 execute and the remaining 400 are cancelled — Correct answer
Answer: D. The matchable portion executes and the remainder is cancelled. The 600 available shares satisfy the buy limit and can match immediately. The remaining 400 cannot match immediately, so the IOC condition cancels them. IOC is not the same as requiring the whole quantity to fill at once. Remember: IOC means execute the available immediate quantity and cancel what cannot match.
Hint, shown before you answer in practice mode: Common mistake: Confusing Immediate or Cancel with a whole-order fill requirement.
VII-043mediumapplication
Q7A market buy order for 400 shares meets a sell book of 100 shares at ₹500 and 300 shares at ₹502, with no better offers. What is the average execution price?
Option A. ₹500.00
Why it is wrong: Only 100 shares are available at ₹500.
Option B. ₹501.00
Why it is wrong: This is a simple average of the two prices, not weighted by quantity.
Option C. ₹501.50 — Correct answer
Option D. ₹502.00
Why it is wrong: This prices all 400 shares at the last fill.
Answer: C. Weight each price by the shares filled at it. 100 × ₹500 = ₹50,000 and 300 × ₹502 = ₹1,50,600. Total ₹2,00,600 ÷ 400 shares = ₹501.50. Remember: Average execution price is total consideration divided by total executed quantity.
Hint, shown before you answer in practice mode: Common mistake: Averaging price levels equally when the quantities differ.
VII-049mediumnumerical
Q8Four 100-share buy orders are pending: P at ₹250 entered at 10:01, Q at ₹251 at 10:02, R at ₹251 at 10:03 and S at ₹249 at 09:59. With no other orders, which matches first against a 100-share market sell?
Option A. Order P
Why it is wrong: Its earlier time does not overcome its lower bid price.
Option B. Order S
Why it is wrong: It is oldest, but its bid price is the least competitive.
Option C. Order Q — Correct answer
Option D. Order R
Why it is wrong: It matches the best price but entered after Q.
Answer: C. This answer has the best bid price and is earlier than the other order at that price. For buy orders, ₹251 is the best price, ahead of ₹250 and ₹249. Q and R both quote ₹251. Q entered earlier, so Q has priority. Remember: Rank bids by highest price first, then earliest time.
Hint, shown before you answer in practice mode: Common mistake: Using earliest entry time across all prices instead of only within a price level.
VII-055mediumapplication
Q9A limit order marked DAY remains entirely unexecuted when that trading day ends. What happens to it?
Option A. It carries forward unchanged to the next trading day
Why it is wrong: It incorrectly extends the order beyond its DAY validity.
Option B. It changes into a market order for the next session
Why it is wrong: Expiry does not convert a limit order into a market order.
Option C. It is sent to settlement at the stated limit price
Why it is wrong: An unexecuted order is not a completed trade.
Option D. It is cancelled at the end of the trading day — Correct answer
Answer: D. This answer follows the DAY time condition. No execution has occurred. There is no trade to settle. The unexecuted DAY order expires at the end of the day rather than carrying forward or changing order type. Remember: An unexecuted DAY order does not survive the trading day.
Hint, shown before you answer in practice mode: Common mistake: Confusing order expiry with trade settlement or automatic renewal.
VII-056easyconceptual
Q10When a broker verifies an applicant’s identity and address during KYC, what is the primary purpose of that check?
Option A. To establish who the applicant is — Correct answer
Option B. To confirm every future trading instruction
Why it is wrong: The check does not itself verify future transaction instructions.
Option C. To calculate margin on future positions
Why it is wrong: Margin depends on the relevant exposure, not merely verified identity.
Option D. To determine the price of future trades
Why it is wrong: Future trade prices are not determined through this identity check.
Answer: A. Identity verification is the purpose of the described check. The information concerns who is opening the account and how that identity is verified. It is not a calculation of future exposure or a confirmation of trades that have not happened. Remember: KYC identifies the customer. It is not a substitute for transaction-specific checks.
Hint, shown before you answer in practice mode: Common mistake: Assuming a verified identity makes all later trading activity automatically authorised.
VII-057easyconceptual
Q11A software fault posts one confirmed exchange execution twice in a broker’s back-office ledger. No second exchange execution exists. Which risk has materialised?
Option A. Market risk
Why it is wrong: No adverse market-price movement caused this duplicate entry.
Option B. Operational risk — Correct answer
Option C. Counterparty credit risk
Why it is wrong: No counterparty failure to perform is described.
Option D. Market liquidity risk
Why it is wrong: Difficulty obtaining a market execution is not the problem.
Answer: B. A system or processing failure is an operational-risk event. The initiating problem is faulty processing of a trade record. There is no stated adverse market move, counterparty default or inability to trade at a reasonable price. Remember: System and processing errors belong to operational risk.
Hint, shown before you answer in practice mode: Common mistake: Calling every problem involving a securities trade market risk.
VII-058mediumapplication
Q12A broker’s cash book shows a favourable bank balance of ₹2,40,000. It includes a ₹25,000 deposit not yet credited by the bank and a ₹15,000 issued cheque not yet presented. Bank charges of ₹1,000 appear only in the bank statement. With no other differences, what favourable balance should the bank statement show?
Option A. ₹2,39,000
Why it is wrong: It adjusts only the bank charge and ignores the deposit and cheque timing differences.
Option B. ₹2,49,000
Why it is wrong: It reverses both timing adjustments while correctly subtracting the bank charge.
Option C. ₹2,29,000 — Correct answer
Option D. ₹2,31,000
Why it is wrong: It adds the ₹1,000 bank charge instead of subtracting it, while applying the timing differences correctly.
Answer: C. This answer applies all three adjustments in the correct direction. Start with the favourable cash-book balance of ₹2,40,000. Subtract ₹25,000 because the cash book includes a deposit that the bank has not credited. Add ₹15,000 because the cash book has deducted the cheque but the bank has not paid it. Subtract ₹1,000 for charges already debited by the bank. Bank balance = ₹2,40,000 − ₹25,000 + ₹15,000 − ₹1,000 = ₹2,29,000. Posting the bank charge would reduce the cash book to ₹2,39,000. The remaining ₹10,000 difference is explained by the two timing items. Remember: For each difference, ask which record already includes the cash movement.
Hint, shown before you answer in practice mode: Common mistake: Adding a deposit that the bank has not yet credited when moving from cash book to bank statement.
VII-063hardnumerical
Q13A member's trades in one netted settlement: client R buys 300 Alpha at ₹400 and sells 100 Alpha at ₹410. Client S sells 150 Alpha at ₹405 and buys 200 Beta at ₹100. The own account buys 50 Alpha at ₹402 and sells 50 Beta at ₹102. The ledger shows a net payable of ₹63,450. Which single recording error explains it?
Option A. Leaving out R's sale of 100 Alpha shares
Why it is wrong: Leaving out R's ₹41,000 sale would give ₹94,250.
Option B. Leaving out S's purchase of 200 Beta shares
Why it is wrong: Leaving out S's ₹20,000 purchase would give ₹33,250.
Option C. Leaving out the own account's purchase of 50 Alpha shares
Why it is wrong: Leaving out the ₹20,100 purchase would give ₹33,150.
Option D. Recording the own account's sale of 50 Beta shares as a purchase — Correct answer
Answer: D. The correct net payable is ₹1,60,100 of purchases − ₹1,06,850 of sales = ₹53,250. The ledger is ₹10,200 too high. Booking the ₹5,100 Beta sale as a purchase adds 2 × ₹5,100 = ₹10,200. Remember: A side reversal creates a two-times-notional break, not a one-times-notional omission.
Hint, shown before you answer in practice mode: Common mistake: Looking only for a missing trade equal to the discrepancy instead of testing a sign reversal.
VII-074hardnumerical
Q14Which client-onboarding document specifically explains the risks inherent in derivatives trading?
Option A. Risk Disclosure Document — Correct answer
Option B. Know Your Client form
Why it is wrong: Its identifying information serves a different onboarding purpose.
Option C. Brokerage tariff sheet
Why it is wrong: A schedule of charges is not the dedicated risk-disclosure document.
Option D. Contract note
Why it is wrong: It records executed trades rather than providing the initial risk disclosure.
Answer: A. This is the document defined for disclosure of inherent derivative risks. The requested function is explaining derivatives risks. The NSE F&O Regulations identify the Risk Disclosure Document for that purpose. It should not be confused with identifying information, charges or a trade confirmation. Remember: Match the document to its purpose: risk disclosure explains trading risks.
Hint, shown before you answer in practice mode: Common mistake: Treating every page in an account-opening pack as serving the same function.
VII-081easyconceptual
Q15A client declines to execute a Demat Debit and Pledge Instruction (DDPI) and chooses to issue valid DIS or eDIS instructions for settlement. Which statement is correct?
Option A. DDPI is compulsory whenever the client trades online.
Why it is wrong: The explicit-consent requirement also applies to internet-based trading.
Option B. DDPI is voluntary, and the client may use the stated alternative. — Correct answer
Option C. The broker may treat refusal as consent to a standing DDPI.
Why it is wrong: Consent cannot be inferred from the client’s refusal.
Option D. Using DIS requires the client to convert all holdings into physical certificates.
Why it is wrong: A physical instruction slip is not a physical share certificate.
Answer: B. The framework permits the client to use DIS or eDIS and requires explicit consent for DDPI. The client has declined the standing DDPI but will still issue valid delivery instructions. SEBI permits physical DIS or eDIS as an alternative. DDPI requires the client’s explicit consent. Remember: Voluntary DDPI does not remove the option of properly issued DIS or eDIS.
Hint, shown before you answer in practice mode: Common mistake: Confusing a physical delivery instruction slip with a physical security holding.
VII-082mediumregulatory
Q16A broker outsources a critical settlement system. Which evidence most directly tests whether processing can recover within its agreed recovery objective after a disruption?
Option A. A copy of the vendor’s signed contract that states the agreed recovery time
Why it is wrong: The contract documents duties but does not show that recovery works.
Option B. A report showing the size of the latest backup of the settlement data
Why it is wrong: Backup size alone does not demonstrate successful restoration or timely processing.
Option C. A list of the vendor’s support staff and their 24-hour telephone numbers
Why it is wrong: Contacts assist escalation but do not test recovery of the service.
Option D. A completed recovery drill using restored data at the alternate facility — Correct answer
Answer: D. This answer tests the actual restoration and resumption of processing against the stated objective. The failure scenario requires restoring data and restarting the critical process. A completed recovery drill directly tests those steps. Compare its results with the agreed objective and correct any deficiencies. Remember: Test recovery by restoring and operating, not merely by checking that a plan or backup exists.
Hint, shown before you answer in practice mode: Common mistake: Equating the existence of backup files with proven operational recovery.
VII-083mediumapplication
Q17A client's net option premium cost was ₹5,200. At expiry the client receives a net exercise settlement of ₹10,000. The ₹22,000 margin is then returned in full. What is the client's net trading profit?
Option A. ₹10,000 profit
Why it is wrong: This forgets the ₹5,200 premium cost.
Option B. ₹26,800 profit
Why it is wrong: This adds the returned margin as if it were profit.
Option C. ₹17,200 loss
Why it is wrong: This treats the margin as a cost.
Option D. ₹4,800 profit — Correct answer
Answer: D. Profit counts the premium and the settlement, not the margin. ₹10,000 − ₹5,200 = ₹4,800. Margin is the client's own money held as security, so its return is not profit. Remember: Separate genuine trading cash flows from deposits and releases of collateral.
Hint, shown before you answer in practice mode: Common mistake: Treating released margin as additional profit or blocked margin as a trading loss.
VII-100hardnumerical
Q18A buy order for 800 shares has executed 350 shares. The exchange then confirms cancellation of the remaining quantity, with no further execution. What is the resulting position?
Option A. All 800 shares are cancelled
Why it is wrong: It treats an order cancellation as reversal of completed trades.
Option B. 350 shares are bought and 450 are cancelled — Correct answer
Option C. 350 shares are cancelled and 450 are bought
Why it is wrong: It reverses which quantity executed and which quantity was cancelled.
Option D. All 800 shares are bought
Why it is wrong: It treats the original order size as though every share had executed.
Answer: B. This answer preserves the execution and cancels only the balance. Executed quantity = 350 shares. Unexecuted balance = 800 − 350 = 450 shares. The accepted cancellation removes only those 450 unmatched shares. The completed purchase of 350 remains. Remember: Keep the original order quantity, executed quantity and cancelled balance separate.
Hint, shown before you answer in practice mode: Common mistake: Assuming that cancelling an order reverses its earlier partial fills.
VII-105mediumapplication
Q19A staff member offers to complete a client’s online demat instruction and asks the client to send the account password and OTP. Which response preserves the required credential safeguard?
Option A. Share the password but keep the OTP private
Why it is wrong: Keeping the OTP private does not make password disclosure appropriate.
Option B. Send the OTP after confirming the staff member’s name
Why it is wrong: Recognising a staff member does not create an OTP-sharing exception.
Option C. Share both details and change the password afterwards
Why it is wrong: A later password change does not prevent immediate use of the disclosed credentials.
Option D. Enter the credentials personally without sharing either — Correct answer
Answer: D. This answer retains personal control of both authentication factors. CDSL’s investor guidance says not to share passwords, OTPs or e-facility login credentials. The client should authenticate personally through the legitimate interface rather than disclose either credential to another person. Remember: Assistance should not require disclosure of personal authentication credentials.
Hint, shown before you answer in practice mode: Common mistake: Assuming that a familiar intermediary employee can safely receive an OTP.
VII-106easyapplication
Q20For this question, brokerage is the lower of 0.04% of executed value and ₹25 per order. One order fills 200 shares at ₹300 and 300 shares at ₹302. Ignoring other charges, what brokerage applies?
Option A. ₹25.00 — Correct answer
Option B. ₹50.00
Why it is wrong: It charges the ₹25 cap twice merely because there are two fills.
Option C. ₹60.24
Why it is wrong: It calculates the percentage charge but ignores the cap.
Option D. ₹24.00
Why it is wrong: It calculates percentage brokerage only on the first fill.
Answer: A. The ₹25 order-level cap is lower than the percentage charge. First fill value = 200 × ₹300 = ₹60,000. Second fill value = 300 × ₹302 = ₹90,600. Total executed value = ₹1,50,600. Percentage brokerage = ₹1,50,600 × 0.0004 = ₹60.24. There is one order. Brokerage = lower of ₹60.24 and ₹25 = ₹25. Remember: Aggregate fills at the level to which the stated tariff applies.
Hint, shown before you answer in practice mode: Common mistake: Confusing the number of fills with the number of chargeable orders.
VII-107mediumnumerical
Q21A client started with ₹80,000 cash. Futures mark-to-market was a ₹6,000 payment on Day 1 and a ₹7,000 receipt on Day 2. Two open contracts still block ₹40,000 as margin. What is the client's total cash balance, including the blocked amount?
Option A. ₹81,000 — Correct answer
Option B. ₹41,000
Why it is wrong: ₹41,000 is only the free part, not the total.
Option C. ₹87,000
Why it is wrong: This forgets the Day 1 payment.
Option D. ₹74,000
Why it is wrong: This forgets the Day 2 receipt.
Answer: A. Blocked margin is still the client's cash. ₹80,000 − ₹6,000 + ₹7,000 = ₹81,000. Of this, ₹41,000 is free and ₹40,000 is blocked. Remember: A margin block affects availability, while settled profit or loss changes the total cash balance.
Hint, shown before you answer in practice mode: Common mistake: Subtracting blocked margin from the cash ledger as though it were a fee.
VII-125hardnumerical
Q22An unchanged execution message is delivered twice with the same exchange, segment, trade date and unique trade ID. No correction is involved. Which control best prevents a second ledger booking while retaining separate fills of the same order?
Option A. Allow only one execution booking for each order ID and reject any later message.
Why it is wrong: An order can have multiple genuine fills. This rule would discard later valid executions.
Option B. Allow only one execution booking for each client ID on each trading day.
Why it is wrong: One client can have multiple genuine trades in a day.
Option C. Post both messages to the client ledger and offset them against future transactions.
Why it is wrong: It first creates the error and relies on an unrelated future transaction to mask it.
Option D. Check the full execution identity and ignore an already-booked identical message. — Correct answer
Answer: D. This answer excludes only the already-recorded execution, preserving distinct fills. The scenario expressly gives the same unique execution identity and unchanged contents twice. Checking whether that execution has already been booked prevents a duplicate entry. Separate fills have different execution identities and remain eligible to be booked. This is an authored control-design application. It is not a claim that a regulator mandates these exact software field names. Remember: Use execution identity to prevent duplicate trade postings.
Hint, shown before you answer in practice mode: Common mistake: Deduplicating by order or client when multiple executions can legitimately exist.
VII-131mediumapplication
Q23A client signs a broker agreement containing a clause that contravenes an applicable regulatory provision. Which statement follows from the investor-charter protection?
Option A. The client is not bound by the clause to the extent it contravenes the provision. — Correct answer
Option B. The client’s signature allows the clause to override the provision.
Why it is wrong: A signature does not authorise the stated regulatory override.
Option C. The clause overrides the provision once the agreement is notarised.
Why it is wrong: Notarisation does not cure the conflict described.
Option D. The clause overrides the provision until the broker voluntarily removes it.
Why it is wrong: The protection is not dependent on the broker choosing to delete the clause.
Answer: A. This answer states the protection for a conflicting clause without treating the entire contract as automatically void. The question establishes that the clause conflicts with an applicable regulatory provision. The cited charter says the client is not bound by such a clause. Signature, notarisation or the broker’s preference does not remove that protection. This identifies the charter rule. It does not decide the facts or remedy in an actual legal dispute. Remember: Check an agreement against applicable regulatory protections, not just whether it was signed.
Hint, shown before you answer in practice mode: Common mistake: Assuming a signed clause necessarily overrides regulation.
VII-132mediumregulatory
Introduction to Securities Broking Operations: common questions
How many practice questions are there on Introduction to Securities Broking Operations?
23 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 8 practice topics for NISM Series VII, which has 150 questions in total.
Are these real NISM Series VII questions on Introduction to Securities Broking Operations?
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 VII?
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.
Risk Management
29 questions on Risk Management. Its quiz opens on that unit.
Open Risk Management