Settlement Process
21 questions. Each answer is explained.
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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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 21 questions on Settlement Process, with answers
Q1A clearing member has a funds pay-in obligation in NSE Clearing’s cash-market T+1 cycle. By when must clear funds be available in its primary clearing account on settlement day?
Option A. 12:30 pm
Why it is wrong: 12:30 pm is later than the specified pay-in deadline.
Option B. 10:30 am — Correct answer
Option C. 1:30 pm
Why it is wrong: 1:30 pm is associated with the funds-payout stage, not this pay-in requirement.
Option D. 3:30 pm
Why it is wrong: 3:30 pm confuses this obligation with a securities-payout deadline.
Answer: B. 10:30 am is the specified latest time for these clear funds. The inspected funds-settlement instruction requires clear funds on or before 10:30 am on the T+1 settlement day. The question concerns the member’s primary clearing account, not when a client sees a credit. Remember: Keep funds pay-in, funds payout and securities payout separate.
Hint, shown before you answer in practice mode: Common mistake: Using a payout time to answer a pay-in question.
VII-027easyregulatory
Q2For a normal T+1 purchase eligible for direct client payout, what is the final securities-payout deadline under the revised NSE Clearing process? Assume a verified client demat account and no custodian or failed-instruction exception.
Option A. 3:30 pm on settlement day — Correct answer
Option B. 12:30 pm on settlement day
Why it is wrong: 12:30 pm is not the revised final securities-payout deadline.
Option C. 1:30 pm on settlement day
Why it is wrong: 1:30 pm is the earlier securities-payout deadline that was extended.
Option D. 10:30 am on settlement day
Why it is wrong: 10:30 am is associated with the pay-in stage.
Answer: A. The revised final deadline is 3:30 pm. The direct-client payout process uses a final securities-payout deadline of 3:30 pm on settlement day. This is the prescribed payout stage. It should not be converted into a guarantee that every exceptional or failed credit is visible by that exact minute. Remember: For the stated direct-payout process, use the revised securities deadline.
Hint, shown before you answer in practice mode: Common mistake: Reusing the former 1:30 pm securities-payout deadline.
VII-028mediumregulatory
Q3A normal T+1 equity trade is executed on Thursday. Friday is a trading and settlement holiday. Saturday and Sunday are non-settlement days, and Monday is a working settlement day. When is the trade settled?
Option A. Friday
Why it is wrong: The question explicitly makes Friday a settlement holiday.
Option B. Saturday
Why it is wrong: Saturday is expressly a non-settlement day.
Option C. Monday — Correct answer
Option D. Tuesday
Why it is wrong: Moving to Tuesday adds a settlement day that is not required.
Answer: C. Monday is the next eligible settlement day after Thursday. Thursday is T. Friday cannot count because it is a settlement holiday. Saturday and Sunday are also excluded under the stated assumptions. Monday is therefore T+1. Remember: Skip non-settlement days when counting T+1.
Hint, shown before you answer in practice mode: Common mistake: Treating the plus one as one calendar day.
VII-029mediumapplication
Q4A normal-market delivery shortage is not bought in at auction. The highest NSE price from trade day to auction day is ₹236 and the official auction-day closing price is ₹210. With no special corporate-action rule, what is the close-out price per share?
Option A. ₹210
Why it is wrong: ₹210 uses the closing price without the required uplift or comparison.
Option B. ₹236
Why it is wrong: ₹236 is only the first benchmark, and it is lower than ₹252.
Option C. ₹283.20
Why it is wrong: ₹283.20 applies the 20% uplift to ₹236 instead of to the auction-day closing price.
Option D. ₹252 — Correct answer
Answer: D. ₹252 is the higher of the two correctly calculated benchmarks. Benchmark 1 is the stated highest price from trade day through auction day: ₹236 per share. Benchmark 2 is 20% above the auction-day official close: ₹210 × 1.20 = ₹252 per share. Close-out price = max(₹236, ₹252) = ₹252 per share. This is a price, not the total debit for an unstated quantity. Remember: Apply the uplift to the auction-day close, then compare it with the period high.
Hint, shown before you answer in practice mode: Common mistake: Adding 20% to the highest price rather than to the closing price.
VII-030mediumnumerical
Q5A clearing member delivers 400 shares short at pay-in. The official closing price is ₹155 on the immediately preceding trading day and ₹162 on pay-in day. Under NSE Clearing’s ordinary valuation-debit rule, what is the initial debit?
Option A. ₹64,800
Why it is wrong: ₹64,800 uses the pay-in-day close of ₹162.
Option B. ₹62,000 — Correct answer
Option C. ₹2,800
Why it is wrong: ₹2,800 is only 400 × the ₹7 difference between the prices.
Option D. ₹74,400
Why it is wrong: ₹74,400 adds a 20% close-out-style uplift that is not part of this valuation calculation.
Answer: B. 400 shares multiplied by ₹155 gives ₹62,000. Use the official close of the trading day immediately before pay-in: ₹155 per share. Valuation debit = short quantity × valuation price = 400 × ₹155 = ₹62,000. This is the initial valuation debit. It is not a calculation of the ultimate auction cost or a normal-market close-out price. Remember: Use the correct reference date before multiplying the shortage quantity.
Hint, shown before you answer in practice mode: Common mistake: Confusing valuation debit with a subsequent close-out charge.
VII-031mediumnumerical
Q6A normal-market short delivery under the T+1 cycle goes to a buy-in auction on T+1. On which day is that auction settled under NSE Clearing’s process?
Option A. T+2 — Correct answer
Option B. T+1
Why it is wrong: T+1 is the stated auction day, not its completion day.
Option C. T+3
Why it is wrong: T+3 adds another day beyond the stated standard process.
Option D. T
Why it is wrong: T precedes the stated shortage and auction.
Answer: A. The auction settles on T+2 relative to the original trade. The current securities-settlement process identifies the shortage auction on T+1 and completion of auction settlement on T+2. Here T is the date of the original trade. The labels count eligible settlement days. Remember: Anchor both auction dates to the original trade day.
Hint, shown before you answer in practice mode: Common mistake: Mixing a legacy T+2 trade-settlement schedule with the T+1 process.
VII-032easyregulatory
Q7A clearing member has a funds shortage of ₹9,00,000 for one chargeable day. At the stated penal rate of 0.07% per day, what is the monetary charge for that day, excluding other consequences?
Option A. ₹63
Why it is wrong: ₹63 uses 0.007%, one-tenth of the stated rate.
Option B. ₹6,300
Why it is wrong: ₹6,300 uses 0.7%, ten times the stated rate.
Option C. ₹630 — Correct answer
Option D. ₹63,000
Why it is wrong: ₹63,000 uses 7%, confusing 0.07 with 0.07%.
Answer: C. ₹630 applies 0.07% for one day. 0.07% = 0.07 ÷ 100 = 0.0007. Charge = shortage × daily rate × days = ₹9,00,000 × 0.0007 × 1 = ₹630. The calculation gives only the monetary charge. It does not mean a member can cure every default consequence by paying that amount. Remember: Divide a percentage by 100 before multiplication.
Hint, shown before you answer in practice mode: Common mistake: Using 0.07 as the decimal equivalent of 0.07%.
VII-033mediumnumerical
Q8Which settlement exposure is delivery versus payment primarily designed to prevent?
Option A. Delivering securities without receiving the corresponding payment — Correct answer
Option B. A fall in market price after an investment is bought
Why it is wrong: A completed DvP settlement does not prevent subsequent price losses.
Option C. A need for cash before the scheduled settlement time
Why it is wrong: Funding requirements can still exist despite linked settlement.
Option D. The cost of replacing a trade that fails before settlement
Why it is wrong: Replacement cost can arise even where unpaired final delivery is prevented.
Answer: A. This answer describes losing the delivered principal because the other settlement leg does not occur. The securities leg should not be completed without the corresponding payment leg. That linkage addresses principal risk. It is not a guarantee against later market movements, funding needs or every cost of a failed trade. Remember: DvP protects the exchange of principal. It does not eliminate every trading risk.
Hint, shown before you answer in practice mode: Common mistake: Treating linked settlement as protection against all losses connected with a trade.
VII-065mediumapplication
Q9An investor holds 150 shares priced at ₹800 each. Every ₹10-face-value share is split into five ₹2-face-value shares. Assuming only a value-preserving mechanical adjustment, what holding and theoretical price result?
Option A. 150 shares at ₹160 each
Why it is wrong: It adjusts the price but leaves the original quantity unchanged.
Option B. 750 shares at ₹160 each — Correct answer
Option C. 750 shares at ₹800 each
Why it is wrong: It multiplies the share count without the compensating price adjustment.
Option D. 300 shares at ₹400 each
Why it is wrong: It uses a two-for-one split rather than the stated five-for-one split.
Answer: B. This answer multiplies quantity by five and divides price by five. New quantity = 150 × 5 = 750 shares. Theoretical price = ₹800 ÷ 5 = ₹160 per share. Value check: 150 × ₹800 = ₹1,20,000 and 750 × ₹160 = ₹1,20,000. Actual market trading may differ from this mechanical benchmark. Remember: For the stated mechanical split, multiply quantity and divide price by the same factor.
Hint, shown before you answer in practice mode: Common mistake: Treating extra shares from a split as an automatic increase in investment value.
VII-066mediumnumerical
Q10A member's correct net funds payable for a settlement is ₹53,250. It has ₹47,000 of clear funds in its clearing account by the cut-off. Another ₹8,000 transfer will arrive only after the cut-off. How much more clear funding is needed by the cut-off?
Option A. Nil
Why it is wrong: This counts the late ₹8,000 as if it were already clear.
Option B. ₹14,250
Why it is wrong: This adds the ₹8,000 to the shortfall instead of simply leaving it out.
Option C. ₹6,250 — Correct answer
Option D. ₹53,250
Why it is wrong: This ignores the ₹47,000 already available.
Answer: C. Only money that is clear by the cut-off counts. ₹53,250 − ₹47,000 = ₹6,250. The ₹8,000 that arrives later does not help meet this cut-off. Remember: Funding readiness depends on clear money at the required time, not on a transfer being initiated.
Hint, shown before you answer in practice mode: Common mistake: Counting an incoming payment before it is usable for settlement.
VII-075hardnumerical
Q11A client sells 1,000 shares. Accepted early pay-in is specifically allocated to 600 shares of that sale. With no other early pay-in, how many sold shares remain outside the early-pay-in-based margin exemption?
Option A. Nil
Why it is wrong: It incorrectly extends relief on part of the sale to the entire sale.
Option B. 600 shares
Why it is wrong: This is the covered quantity, not the quantity remaining outside relief.
Option C. 400 shares — Correct answer
Option D. 1,000 shares
Why it is wrong: It ignores the accepted and allocated early pay-in.
Answer: C. The exemption covers 600 of the 1,000 sold shares, leaving 400 uncovered. Total sold quantity = 1,000 shares. Confirmed and allocated early pay-in = 600 shares. Quantity outside that exemption = 1,000 − 600 = 400 shares. This identifies the scope of EPI relief, not the final rupee margin requirement. Remember: Apply EPI relief to the covered quantity, not automatically to every sale or position.
Hint, shown before you answer in practice mode: Common mistake: Confusing partial completion with a full-position exemption.
VII-088mediumnumerical
Q12A stock-option contract has a ₹800 strike and a 500-share market lot. The underlying announces one bonus share for every four held. Using NSE’s bonus adjustment method, what strike and market lot result, with no rounding issue?
Option A. ₹640 strike and 625 shares — Correct answer
Option B. ₹1,000 strike and 625 shares
Why it is wrong: It multiplies the strike instead of dividing by the bonus factor.
Option C. ₹640 strike and 400 shares
Why it is wrong: It divides both the strike and lot instead of increasing the lot.
Option D. ₹200 strike and 2,000 shares
Why it is wrong: It treats one-for-four as a fourfold adjustment instead of a factor of 1.25.
Answer: A. The factor is 1.25. The strike divides by it and the lot multiplies by it. Adjustment factor = (new bonus shares + existing shares) ÷ existing shares = (1 + 4) ÷ 4 = 1.25. Adjusted strike = ₹800 ÷ 1.25 = ₹640. Adjusted market lot = 500 × 1.25 = 625 shares. Check: ₹800 × 500 = ₹640 × 625 = ₹4,00,000 of strike-value exposure. Remember: For a bonus, divide strike by the factor and multiply contract quantity by the same factor.
Hint, shown before you answer in practice mode: Common mistake: Using the bonus ratio itself rather than the total-shares adjustment factor.
VII-089mediumnumerical
Q13A cash-settled index settles at 18,650 at expiry. A client holds 2 long calls at strike 18,500, 1 short call at strike 18,800 and 1 short put at strike 18,700. Each contract is 40 units. Excluding premiums, what is the client's net exercise settlement?
Option A. Receive ₹12,000
Why it is wrong: This forgets the ₹2,000 owed on the short put.
Option B. Receive ₹10,000 — Correct answer
Option C. Receive ₹14,000
Why it is wrong: This adds the ₹2,000 owed instead of taking it off.
Option D. Pay ₹10,000
Why it is wrong: The amount is right but the direction is reversed.
Answer: B. Settle each option at its value at expiry. Long calls: 150 × 2 × 40 = ₹12,000 to receive. The short call is out of the money. Short put: 50 × 40 = ₹2,000 to pay. Net = ₹10,000 to receive. Remember: Calculate each leg’s intrinsic value, apply its buy/sell direction, then net the expiry cash flows.
Hint, shown before you answer in practice mode: Common mistake: Confusing exercise proceeds with trading profit after premiums.
VII-097hardnumerical
Q14A client has written a cash-settled index put with strike 18,700. At expiry the index settles at 18,650, and in-the-money options are exercised automatically. What is the client's position?
Option A. The client owes a cash settlement as the option writer — Correct answer
Option B. The client may refuse settlement because it sold the put
Why it is wrong: Writing an option creates a duty, not the buyer's right to choose.
Option C. The client must take delivery of the index's shares
Why it is wrong: Index options settle in cash. No shares are delivered.
Option D. There is no obligation because the client received a premium
Why it is wrong: The premium does not remove an in-the-money obligation.
Answer: A. The index is below the strike, so the put is in the money and is exercised. The writer must pay the difference in cash. The premium received earlier does not cancel this. Remember: For an in-the-money cash-settled put, the writer owes cash upon assignment.
Hint, shown before you answer in practice mode: Common mistake: Assuming premium receipt allows the seller to refuse exercise settlement.
VII-098mediumapplication
Q15For an otherwise normal securities payout, no verified primary demat account is available for the client. Under NSE Clearing’s specified exception process, where is that payout credited?
Option A. To any demat account supplied verbally by the dealer
Why it is wrong: An unverified verbal instruction is not the stated exception route.
Option B. To the clearing member’s pool account — Correct answer
Option C. To the issuer’s treasury account
Why it is wrong: The issuer is not the payout destination in this situation.
Option D. To the member’s proprietary investment account
Why it is wrong: A pool-account credit is not a proprietary allocation.
Answer: B. This is the specified destination for the exception. NSE Clearing lists absence of a verified primary demat account as a reason for credit to the clearing member’s pool account. That processing route does not convert the client’s securities into the member’s proprietary investment. Remember: Distinguish an exception-processing account from beneficial ownership.
Hint, shown before you answer in practice mode: Common mistake: Assuming a failed direct-credit prerequisite cancels the client’s entitlement.
VII-113mediumregulatory
Q16An eligible investor holds 240 shares with face value ₹5 each. A dividend of 60% of face value is declared. The market price is ₹80. What gross dividend is due, before any tax deduction?
Option A. ₹11,520
Why it is wrong: It applies 60% to the ₹80 market price and multiplies by 240.
Option B. ₹1,200
Why it is wrong: It gives the total face value, 240 × ₹5, without applying 60%.
Option C. ₹144
Why it is wrong: It multiplies 240 by 0.60 but omits the ₹5 face value.
Option D. ₹720 — Correct answer
Answer: D. This answer applies the declared rate to face value and then to the eligible quantity. Dividend per share = ₹5 × 60% = ₹3. Total gross entitlement = 240 × ₹3 = ₹720. The ₹80 market price is not the stated dividend base. No tax deduction is calculated. Remember: Use the dividend base expressly stated in the declaration.
Hint, shown before you answer in practice mode: Common mistake: Applying a face-value dividend percentage to market price.
VII-114mediumnumerical
Q17A client buys 3 index futures contracts at 20,000. Each contract is 25 index units. The day's settlement price is 19,920. What is the day's mark-to-market cash flow?
Option A. Pay ₹2,000
Why it is wrong: This uses only one contract of 25 units.
Option B. Receive ₹6,000
Why it is wrong: A long position loses money when the price falls.
Option C. Pay ₹240
Why it is wrong: This forgets the 25-unit contract size.
Option D. Pay ₹6,000 — Correct answer
Answer: D. A long position loses when the price falls. The fall is 80 points on 3 × 25 = 75 units. 80 × 75 = ₹6,000, which the client pays. Remember: Apply the price change to both contract count and contract multiplier.
Hint, shown before you answer in practice mode: Common mistake: Calculating one contract’s MTM when several contracts are open.
VII-121mediumnumerical
Q18A client is long 3 index futures of 25 units each, marked at yesterday's settlement price of 19,920. Today the client sells 1 contract at 19,960. Today's settlement price is 20,040. What is today's total mark-to-market receipt?
Option A. ₹1,000
Why it is wrong: This counts only the contract sold today.
Option B. ₹7,000 — Correct answer
Option C. ₹6,000
Why it is wrong: This leaves out the gain on the contract sold today.
Option D. ₹9,000
Why it is wrong: This treats all three contracts as still open at 20,040.
Answer: B. Measure today's gains from yesterday's 19,920. The contract sold gains 40 × 25 = ₹1,000. The two still open gain 120 × 50 = ₹6,000. Total = ₹7,000. Remember: Use the previous settlement price for carried futures, and the actual closing price for a contract closed during the day.
Hint, shown before you answer in practice mode: Common mistake: Reusing the original entry price after the prior day’s MTM has already settled.
VII-122hardnumerical
Q19Two cash-market trades are assigned the same settlement number and date. One order was placed by telephone and the other online. No amendment or exception applies. Which settlement treatment is appropriate?
Option A. Move the telephone trade to the next settlement date.
Why it is wrong: It invents an extra day solely because of the instruction channel.
Option B. Process both trades for their assigned settlement date. — Correct answer
Option C. Move the online trade to same-day settlement automatically.
Why it is wrong: Online entry does not amend the trade to a different cycle in this scenario.
Option D. Remove the telephone trade from exchange settlement.
Why it is wrong: Telephone order entry does not remove the executed trade from its assigned settlement.
Answer: B. This answer preserves the two stated settlement assignments. Both trades have the same assigned settlement number and date. Neither a telephone instruction nor an online instruction is an amendment to that assignment. With no stated exception, both remain in the assigned settlement. This does not claim that every market category has the same cycle. The settlement category and assignment are already fixed in the question. Remember: Use the trade’s settlement assignment rather than infer a cycle from its communication channel.
Hint, shown before you answer in practice mode: Common mistake: Treating online execution as automatic eligibility for a different settlement cycle.
VII-139easyapplication
Q20In a settlement, client B owes a net delivery of 400 shares and client C owes 250. By the pay-in cut-off, the clearing corporation has received 250 shares from B and 250 from C. What shortage remains?
Option A. 150 shares — Correct answer
Option B. 650 shares
Why it is wrong: 650 is the total owed, not the shortage.
Option C. 500 shares
Why it is wrong: 500 is what was received, not the shortage.
Option D. Nil
Why it is wrong: B has delivered less than it owes.
Answer: A. Check each client. B owed 400 and gave 250, so B is short 150. C owed 250 and gave 250. The shortage is 150 shares. Remember: Use accepted clearing deliveries, not intended deliveries, when measuring the shortage.
Hint, shown before you answer in practice mode: Common mistake: Confusing delivered quantity with the amount still missing.
VII-148mediumnumerical
Q21A shortage of 150 shares is bought in at auction at ₹312 a share. The member has already paid a valuation debit of ₹45,000 for this shortage. Ignoring charges, what further debit arises?
Option A. ₹45,000
Why it is wrong: This repeats the valuation debit already paid.
Option B. ₹46,800
Why it is wrong: This is the full auction cost before adjusting for the amount paid.
Option C. ₹1,800 — Correct answer
Option D. ₹91,800
Why it is wrong: This adds the auction cost to the debit already paid.
Answer: C. The auction cost is 150 × ₹312 = ₹46,800. ₹45,000 is already paid. The further debit is ₹1,800. Remember: Reconcile auction cost against the valuation debit already charged before reporting an additional amount.
Hint, shown before you answer in practice mode: Common mistake: Counting a previously paid valuation debit as a separate extra cost again.
VII-149hardnumerical
Settlement Process: common questions
How many practice questions are there on Settlement Process?
21 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 Settlement Process?
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.
Investor Grievances and Arbitration
15 questions on Investor Grievances and Arbitration. Its quiz opens on that unit.
Open Investor Grievances and Arbitration