Unit study guide · NISM Series III-A
Securities Contracts (Regulation) Act, 1956 and Rules, 1957
6 questions in this unit
What this unit covers
- Under the Securities Contracts (Regulation) Act, which instrument is included in the definition of securities?
- What does a securities option ordinarily give its buyer, subject to the contract’s terms?
- Which arrangement is expressly addressed by section 18A of the Securities Contracts (Regulation) Act?
- Under section 21 of the Securities Contracts (Regulation) Act, a listed person must comply with what?
- An ordinary physical-securities contract between parties in one town provides for delivery and full payment on the next day. Which statutory description best fits?
- An ordinary physical-share sale between parties in one town specifies next-day delivery but payment after thirty days. No exception applies. Is this spot delivery?
Key ideas
From the practice bank · 1
Under the Securities Contracts (Regulation) Act, which instrument is included in the definition of securities?
A marketable company debenture falls within the Act’s definition of securities. Remember: The legal definition determines whether an instrument is a security.
Hint Common mistake: Assuming every document involving money is a security. Look for a recognised financial instrument rather than a payment or service document.
III-A-040From the practice bank · 2
What does a securities option ordinarily give its buyer, subject to the contract’s terms?
An option buyer has an exercise right rather than an unconditional obligation to exercise. Remember: The option buyer’s right differs from the writer’s corresponding obligation.
Hint Common mistake: Assuming an option buyer must exercise an unfavourable contract. Distinguish the buyer’s position from a compulsory forward commitment.
III-A-041From the practice bank · 3
Which arrangement is expressly addressed by section 18A of the Securities Contracts (Regulation) Act?
Section 18A addresses the legality and validity of derivatives meeting its specified conditions. Remember: A derivative’s legal validity depends on the applicable statutory framework.
Hint Common mistake: Assuming every privately described derivative has identical statutory treatment. Recall the section dealing with contracts in derivatives.
III-A-042From the practice bank · 4
Under section 21 of the Securities Contracts (Regulation) Act, a listed person must comply with what?
Section 21 requires compliance with the listing-agreement conditions where securities are listed on an application. Remember: Listing brings obligations rather than merely access to exchange trading.
Hint Common mistake: Treating listing approval as the end of the issuer’s compliance duties. Connect admission to exchange listing with the issuer’s continuing obligations.
III-A-043From the practice bank · 5
An ordinary physical-securities contract between parties in one town provides for delivery and full payment on the next day. Which statutory description best fits?
The stated arrangement fits the next-day delivery-and-payment limb of the spot delivery definition. Remember: The statutory spot-delivery definition is not limited to same-day performance.
Hint Common mistake: Confusing the SCRA definition with a separate exchange settlement convention. Use the statutory meaning, not a colloquial meaning of instant payment.
III-A-044From the practice bank · 6
An ordinary physical-share sale between parties in one town specifies next-day delivery but payment after thirty days. No exception applies. Is this spot delivery?
It is not spot delivery on these facts because the statutory limb requires timely payment as well as delivery. Remember: Test both delivery and payment when applying the spot-delivery definition.
Hint Common mistake: Checking the delivery date but ignoring the payment date. Check both legs of settlement rather than only the security movement.
III-A-045