NISM VIII Legal and Regulatory Environment — Practice Questions
Questions on the rules governing equity derivatives: the SCRA and SEBI Act, SEBI's regulatory framework for derivatives, eligibility criteria for stocks and indices, and the obligations placed on trading and clearing members.
25 questions on Legal and Regulatory Environment in the ScoreSetu bank — each with a detailed explanation and, where useful, a memory hook.
What this topic covers
- SCRA and the SEBI Act
- SEBI derivatives framework
- Eligibility criteria for contracts
- Member obligations
Free sample questions
1. The money and securities which are deposited in a clients account _______ .
- A. Can be attached for meeting the obligations of the broker on his proprietary account
- B. Cannot be attached for meeting the obligations of the broker on his proprietary account ✅
- C. Can or cannot be attached depends on the decision of Clearing Corporation
- D. None of the above
Answer: B — Cannot be attached for meeting the obligations of the broker on his proprietary account
Why: The securities or money deposited by clients cannot be attached for meeting broker’s obligation on his proprietary account. The broker has to maintain separate client bank account for segregation of client money. Also brokers should keep margins collected from clients in a separate bank account.
💡 Client money is SEGREGATED -> CANNOT be attached for broker's proprietary dues.
2. When SEBI has approved the bye-laws of a derivative exchange, the exchange is free to introduce futures contracts on any number of stocks and it does not require to go to SEBI every time - State True or False ?
- A. True
- B. False ✅
Answer: B — False
Why: Even after SEBI has approved the bye-laws of a derivatives exchange, the exchange cannot freely introduce futures contracts on any stock without SEBI’s approval. Each new derivative product (like stock futures or options) must be individually approved by SEBI before launch.
💡 Each new derivative product needs SEBI approval EVERY time (bye-law approval alone not enough) -> False.
3. Brokers and dealers of derivative exchanges have also to be registered with SEBI in addition to their registration with stock exchange - State whether True or False?
- A. True ✅
- B. False
Answer: A — True
Why: In addition to their registration as brokers of existing stock exchanges, Derivative brokers/dealers and clearing members are required to seek registration from SEBI.
💡 Derivative brokers/dealers need SEBI registration IN ADDITION to exchange membership.
Practise all 25 Legal and Regulatory Environment questions
Plus the full 697-question NISM VIII bank and real-feel mock exams.