Investor Grievances and Arbitration
15 questions. Each answer is explained.
Question 1 of 10Practice · Series VII — Securities Operations and Risk Management
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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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 15 questions on Investor Grievances and Arbitration, with answers
Q1Within what period after receiving a complaint on SCORES must the regulated entity resolve it and upload its Action Taken Report?
Option A. 30 calendar days
Why it is wrong: Thirty calendar days is not the entity-stage period under the inspected SCORES framework.
Option B. 21 trading days
Why it is wrong: Replacing calendar days with trading days changes the deadline.
Option C. 21 calendar days — Correct answer
Option D. 30 trading days
Why it is wrong: Both the number and the trading-day basis are wrong.
Answer: C. Both the number of days and the calendar-day basis match the requirement. The live SCORES FAQ requires the entity to resolve the complaint and upload its Action Taken Report within 21 calendar days of receipt. This question tests the entity’s response obligation, not the total duration of every possible review or adjudication. Remember: Remember the stage and the type of day, not just the number 21.
Hint, shown before you answer in practice mode: Common mistake: Treating a complaint deadline as an exchange trading-day calculation.
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Q2After an unresolved complaint to a broker, an investor uses SCORES and requests both available reviews. Which sequence correctly identifies the entity response, first review and second review?
Option A. Broker → SEBI → Designated Body
Why it is wrong: It reverses the first and second review authorities.
Option B. Designated Body → Broker → SEBI
Why it is wrong: It puts the first-review body before the entity response.
Option C. SEBI → Designated Body → Broker
Why it is wrong: It reverses the escalation order.
Option D. Broker → Designated Body → SEBI — Correct answer
Answer: D. This answer preserves the entity, first-review and second-review order. The entity, here the broker, provides the initial response. The Designated Body handles the first review. SEBI handles the second review. The sequence is limited to the SCORES route described. It does not make completion of SCORES reviews a universal prerequisite for ODR. Remember: Within SCORES, separate the entity response, Designated Body review and SEBI review.
Hint, shown before you answer in practice mode: Common mistake: Turning a platform-specific review process into a compulsory ladder for every remedy.
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Q3For an NSE member declared a defaulter after 13 August 2024, what is the maximum IPF compensation per eligible investor per defaulter member, subject to the admitted claim?
Option A. ₹15 lakh
Why it is wrong: ₹15 lakh is not the NSE ceiling for the stated category.
Option B. ₹35 lakh — Correct answer
Option C. ₹25 lakh
Why it is wrong: ₹25 lakh is not the specified NSE limit.
Option D. ₹50 lakh
Why it is wrong: ₹50 lakh exceeds the ceiling asked for.
Answer: B. ₹35 lakh matches the stated NSE limit and date scope. NSE’s stated ceiling for the specified category is ₹35 lakh per investor per defaulter or expelled member. The ceiling is not an automatic entitlement to ₹35 lakh. The admitted eligible claim and applicable fund rules still matter. Remember: Never answer an IPF-limit question without checking the named exchange and date.
Hint, shown before you answer in practice mode: Common mistake: Assuming all exchanges have one universal limit or that every claim receives the maximum.
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Q4A dispute on SMART ODR remains unresolved after pre-conciliation. Which stage normally follows?
Option A. Conciliation — Correct answer
Option B. Appellate review
Why it is wrong: There is no prior decision in the scenario to take to an appellate stage.
Option C. Award enforcement
Why it is wrong: The scenario does not contain an arbitral award to enforce.
Option D. Arbitration
Why it is wrong: It skips the conciliation stage identified in this process.
Answer: A. Conciliation follows unsuccessful pre-conciliation. The described ODR sequence moves from pre-conciliation to conciliation. If unresolved after conciliation, arbitration may follow. A conciliator helps the parties seek a resolution. The stem does not describe an existing award or an appeal. Remember: Do not omit pre-conciliation when describing the complete ODR sequence.
Hint, shown before you answer in practice mode: Common mistake: Calling conciliation the first activity on the portal without acknowledging pre-conciliation.
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Q5An investor wants to submit a SCORES complaint without identifying the complainant. How is an anonymous complaint treated?
Option A. It is not accepted as an anonymous complaint — Correct answer
Option B. It is accepted if the broker is identified
Why it is wrong: Naming the broker does not identify the complainant.
Option C. It is accepted if a contract note is attached
Why it is wrong: An attachment does not create an exception to anonymity.
Option D. It is accepted if the disputed amount is large
Why it is wrong: The amount is not the condition that determines this exclusion.
Answer: A. This answer follows the stated exclusion. Identifying the entity complained against is different from identifying the complainant. Supporting documents or a large claim do not remove the anonymous-complaint exclusion. Remember: An anonymous complaint is not an admissible SCORES submission.
Hint, shown before you answer in practice mode: Common mistake: Thinking that strong evidence removes the need for an identified complainant.
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Q6An investor asks SCORES to decide a contested damages claim as an arbitral tribunal. Which description correctly states its role?
Option A. It issues an arbitral award on the damages claim
Why it is wrong: It assigns an arbitral adjudication role to the complaint platform.
Option B. It acts as a civil court for intermediary disputes
Why it is wrong: It incorrectly treats the platform as a civil court.
Option C. It represents the complainant as legal counsel
Why it is wrong: It substitutes legal representation for the platform’s facilitation role.
Option D. It facilitates redressal without adjudicating the dispute — Correct answer
Answer: D. This answer matches the platform’s stated non-adjudicatory role. SCORES supports grievance redressal. Its FAQ expressly distinguishes that function from adjudication. A contested dispute may need an appropriate dispute-resolution forum. SCORES itself is not the arbitral tribunal. Remember: Do not confuse grievance handling with an adjudicatory award.
Hint, shown before you answer in practice mode: Common mistake: Assuming that a regulator’s complaint platform automatically decides every compensation dispute.
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Q7The same investor-broker dispute is already pending before a court. How does the SCORES FAQ treat a complaint on that pending matter?
Option A. It can proceed alongside the same pending court dispute.
Why it is wrong: The FAQ excludes the pending matter rather than permitting parallel handling on SCORES.
Option B. It is excluded from complaints dealt with on SCORES. — Correct answer
Option C. It is admitted if only monetary compensation is requested.
Why it is wrong: Requesting money does not create an exception to the pending-court exclusion.
Option D. It is admitted once the broker agrees to a second proceeding.
Why it is wrong: Broker agreement does not remove the specified platform exclusion.
Answer: B. The FAQ excludes matters pending before a court. The question states that the same matter is already before a court. The SCORES FAQ lists such pending matters among complaints it does not deal with. This says nothing about the merits of the court case. Remember: Check whether the same matter is already pending in an excluded forum.
Hint, shown before you answer in practice mode: Common mistake: Treating SCORES as a parallel court for every unresolved complaint.
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Q8In an investor dispute, a neutral person helps both parties work towards mutually acceptable terms rather than deciding the claim through an award. Which process is described?
Option A. Arbitration
Why it is wrong: An arbitrator decides the dispute through an award rather than merely facilitating mutual terms.
Option B. Award enforcement
Why it is wrong: Enforcement presupposes an award and is not the negotiation assistance described.
Option C. Appellate review
Why it is wrong: A review of an earlier decision is not the process in the stem.
Option D. Conciliation — Correct answer
Answer: D. The neutral assists an agreed settlement rather than adjudicating through an award. The neutral’s role is to assist agreement between the parties. That describes conciliation. Arbitration instead involves determination through an award, subject to the applicable legal framework. Remember: Conciliation seeks mutual agreement. Arbitration produces a decision through an award.
Hint, shown before you answer in practice mode: Common mistake: Assuming every neutral involved in a dispute is acting as an arbitrator.
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Q9An investor is dissatisfied with the entity’s Action Taken Report on SCORES. Within what period from receipt of that report may the investor request the first-level review?
Option A. 15 calendar days — Correct answer
Option B. 15 trading days
Why it is wrong: The review window is not measured in trading days.
Option C. 21 calendar days
Why it is wrong: It substitutes the entity-response deadline.
Option D. 30 calendar days
Why it is wrong: It extends the specified review window.
Answer: A. This answer uses the stated review window and calendar-day basis. The SCORES FAQ provides 15 calendar days from receipt of the Action Taken Report for seeking review. The 21-calendar-day entity-response period is a different stage. Remember: Identify whose action is due before recalling the deadline.
Hint, shown before you answer in practice mode: Common mistake: Using the entity’s response period for the investor’s review request.
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Q10While a complaint is pending on SCORES, the investor opts for Online Dispute Resolution for the same matter. What happens to the complaint on SCORES?
Option A. It remains active until both forums decide the dispute
Why it is wrong: It disregards the stated SCORES disposal rule.
Option B. It becomes an arbitral award against the broker
Why it is wrong: Disposal on a complaint platform is not an arbitral award.
Option C. It is treated as disposed on SCORES — Correct answer
Option D. It is automatically upheld in the investor’s favour
Why it is wrong: Choosing ODR does not decide the claim in the investor’s favour.
Answer: C. This answer states the forum-status consequence. The SCORES FAQ says the pending complaint is treated as disposed when the complainant opts for ODR. That disposal does not establish who is right or amount to an arbitral award. Remember: Disposed on SCORES does not mean adjudicated in favour of either party.
Hint, shown before you answer in practice mode: Common mistake: Reading a closed platform status as a merits decision.
VII-116mediumregulatory
Q11An eligible investor’s admitted claim against an NSE defaulter is ₹8 lakh. The investor has already received ₹3 lakh against that claim from the defaulter’s assets. Assuming no other recovery or adjustment and a non-binding IPF ceiling, what amount remains to be considered for IPF compensation?
Option A. ₹8 lakh
Why it is wrong: It ignores the ₹3 lakh already recovered.
Option B. ₹11 lakh
Why it is wrong: It adds the recovery to the original claim.
Option C. ₹3 lakh
Why it is wrong: It reports the recovered amount, not the unpaid amount.
Option D. ₹5 lakh — Correct answer
Answer: D. This answer is the admitted amount still unmet under the stated assumptions. Unmet claim = admitted claim − recovery already received. ₹8 lakh − ₹3 lakh = ₹5 lakh. The question assumes eligibility and that the ceiling is not binding. It does not promise payment or add the recovery to the claim. Remember: Account for recovery before calculating an unmet claim.
Hint, shown before you answer in practice mode: Common mistake: Treating a compensation ceiling or admitted claim as an automatic additional payment.
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Q12A client disputes having placed a trade by telephone. Assuming a normal call with no recording failure, which record most directly addresses whether the client gave that order?
Option A. The recording of the client’s order instructions — Correct answer
Option B. The contract note showing that the trade executed
Why it is wrong: Trade confirmation does not by itself establish the preceding telephone instruction.
Option C. The price chart for the trading session
Why it is wrong: Market prices do not identify who authorised this trade.
Option D. The broker’s general brokerage tariff
Why it is wrong: A fee schedule does not prove that this order was placed.
Answer: A. This answer directly records the disputed instruction. The relevant issue is whether the client gave the telephone instruction. A recording of that instruction directly addresses it. The inspected SEBI provision includes telephone recordings as order evidence. A contract note alone shows execution rather than the original instruction. Remember: Match the evidence to the disputed fact.
Hint, shown before you answer in practice mode: Common mistake: Treating proof that a trade occurred as conclusive proof of client authorisation.
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Q13A person wants to report information suggesting securities-law violations, rather than seek redress of a personal service complaint. Which SEBI portal is specifically intended for that information?
Option A. SCORES complaint portal
Why it is wrong: The stem concerns market intelligence rather than a personal redressal complaint.
Option B. SMART ODR dispute-resolution portal
Why it is wrong: ODR resolves disputes rather than serving as the designated intelligence-reporting portal.
Option C. Market Intelligence Portal — Correct answer
Option D. SCORES first-review facility
Why it is wrong: A review facility concerns an existing SCORES grievance rather than initial market-intelligence submission.
Answer: C. This answer matches the purpose described. The stated purpose is to provide intelligence about possible securities-law violations. SEBI’s Market Intelligence Portal is designed for that information. SCORES and ODR serve different complaint or dispute functions. Choosing an information-reporting channel does not establish that a violation occurred. It provides material for the relevant authority to consider. Remember: Match the reporting route to whether the matter is information about a possible violation or a personal grievance.
Hint, shown before you answer in practice mode: Common mistake: Submitting every market concern as though it were an individual compensation dispute.
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Q14A client’s purchase executes and settles correctly. The shares later fall in price. No broker default, expulsion or unpaid intermediary claim exists. Does that price loss itself establish an eligible NSE IPF compensation claim?
Option A. No. It is not an unmet admitted claim against a defaulter or expelled member. — Correct answer
Option B. Yes. Any loss on an exchange-traded share is an eligible IPF claim.
Why it is wrong: The fund is not described as covering every exchange investment loss.
Option C. Yes. Correct settlement converts a later price loss into a claim against the broker.
Why it is wrong: Successful settlement does not create the stated unpaid claim.
Option D. Yes. Using a registered broker makes the purchase price protected by IPF.
Why it is wrong: Broker registration does not insure the market price through this fund.
Answer: A. This answer identifies the relevant missing claim category. The scenario expressly excludes member default, expulsion and an unpaid intermediary claim. NSE describes IPF compensation in terms of eligible admitted claims remaining unmet against defaulter or expelled members. An ordinary subsequent price fall does not itself create that claim. This distinguishes the claimed basis, rather than predicting the outcome of a different fact pattern involving misconduct or default. Remember: Identify the claim’s cause rather than treat any financial loss as an IPF event.
Hint, shown before you answer in practice mode: Common mistake: Confusing protection against qualifying intermediary default with protection against price declines.
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Q15Under the SCORES FAQ, within what period from the date of the cause of action should an investor lodge a complaint on SCORES?
Option A. 15 calendar days
Why it is wrong: It confuses a review-request period with the initial complaint-filing period.
Option B. One year — Correct answer
Option C. Three years
Why it is wrong: It substitutes a longer period not stated in this FAQ provision.
Option D. Five years
Why it is wrong: It also extends the period beyond the stated rule.
Answer: B. One year is the period stated for lodging the complaint. The question starts the clock at the cause of action, not at receipt of an Action Taken Report. The SCORES FAQ states a one-year filing period and indicates that complaints beyond it may be rejected. This is the platform’s filing rule. It is not a statement that all other legal remedies cease after one year. Remember: Associate each deadline with its triggering event and procedural stage.
Hint, shown before you answer in practice mode: Common mistake: Using the review window to answer an initial-filing question.
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Investor Grievances and Arbitration: common questions
How many practice questions are there on Investor Grievances and Arbitration?
15 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 Investor Grievances and Arbitration?
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.
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