Unit study guide · NISM Series III-A
SEBI (Intermediaries) Regulations, 2008
9 questions in this unit
What this unit covers
- Who must continuously follow the Intermediaries Regulations code of conduct besides the intermediary itself?
- When must the applicable fit-and-proper criteria be satisfied by a registered intermediary?
- An intermediary plans to increase a service fee for existing clients. What does the general code require before the increase?
- An intermediary receives a dividend on behalf of a client. What should it do with the amount?
- A law requires an intermediary to disclose specified client records to a competent authority. The client objects. What should the intermediary do?
- A salesperson claims the intermediary has regulatory approval for guaranteed profits when no such approval exists. Which duty is breached?
- An authorised inspection seeks relevant records kept by the intermediary. Which response is consistent with its inspection obligations?
- An intermediary discloses a conflict of interest but takes no steps to resolve an unfair effect on a client. Is disclosure alone enough?
- An intermediary’s registration is cancelled, and SEBI orders an orderly transfer of existing client work. What is the compliant course?
Key ideas
From the practice bank · 1
Who must continuously follow the Intermediaries Regulations code of conduct besides the intermediary itself?
Regulation 16 extends the code to directors, officers, employees and key management personnel. Remember: The conduct framework reaches the people running and working within the intermediary.
Hint Common mistake: Assuming conduct requirements apply only to the compliance officer. Consider whether conduct duties stop at the organisation’s registration certificate.
III-A-046From the practice bank · 2
When must the applicable fit-and-proper criteria be satisfied by a registered intermediary?
The fit-and-proper criteria apply at application and during the continuity of registration. Remember: Registration eligibility must be maintained, not merely demonstrated once.
Hint Common mistake: Treating the initial registration decision as permanent proof of eligibility. Decide whether eligibility is a one-time test or a continuing condition.
III-A-047From the practice bank · 3
An intermediary plans to increase a service fee for existing clients. What does the general code require before the increase?
Proper advance notice is required before increasing the service fee under the general code. Remember: Tell clients about fee increases before implementing them.
Hint Common mistake: Assuming a general right to charge fees allows unannounced increases. Think about what clients need before a charge changes.
III-A-048From the practice bank · 4
An intermediary receives a dividend on behalf of a client. What should it do with the amount?
The intermediary must promptly disburse income collected on behalf of the client. Remember: Income collected for clients must reach them promptly.
Hint Common mistake: Treating client entitlements as discretionary retention balances. Identify whose money has been collected.
III-A-049From the practice bank · 5
A law requires an intermediary to disclose specified client records to a competent authority. The client objects. What should the intermediary do?
The required lawful disclosure must be made because confidentiality does not override a legal reporting obligation. Remember: Protect confidentiality while meeting specific lawful disclosure duties.
Hint Common mistake: Treating client confidentiality as an absolute bar to regulatory access. Consider the legal exception to the confidentiality duty.
III-A-050From the practice bank · 6
A salesperson claims the intermediary has regulatory approval for guaranteed profits when no such approval exists. Which duty is breached?
The claim breaches the duty to avoid misleading representations and exaggerated capability claims. Remember: Registration is not approval of profit promises or service claims.
Hint Common mistake: Presenting a registration certificate as an endorsement of investment outcomes. Assess the truth of the claimed regulatory endorsement.
III-A-051From the practice bank · 7
An authorised inspection seeks relevant records kept by the intermediary. Which response is consistent with its inspection obligations?
The intermediary must provide the required records and assistance to the authorised inspection. Remember: Inspection cooperation requires accurate and complete evidence.
Hint Common mistake: Assuming adverse or unflattering records may be excluded. Think about preserving the inspection’s ability to establish facts.
III-A-052From the practice bank · 8
An intermediary discloses a conflict of interest but takes no steps to resolve an unfair effect on a client. Is disclosure alone enough?
Disclosure alone is insufficient because the code also requires appropriate conflict avoidance or equitable resolution measures. Remember: Manage conflicts as well as disclosing them.
Hint Common mistake: Treating a standard conflict disclaimer as a complete solution. Distinguish informing the client from dealing fairly with the conflict.
III-A-053From the practice bank · 9
An intermediary’s registration is cancelled, and SEBI orders an orderly transfer of existing client work. What is the compliant course?
The intermediary must follow the protective directions and cannot use the wind-down to continue unauthorised business. Remember: Cancellation requires an orderly client-protective exit, not abandonment of obligations.
Hint Common mistake: Assuming loss of registration also removes responsibility for existing clients. Separate winding down existing obligations from taking on new regulated business.
III-A-054