NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management
Introduction to the Securities Market for NISM-Series-VII
The Introduction to the Securities Market chapter of NISM-Series-VII explains what the securities market is, who takes part, which instruments trade, who regulates it, which intermediaries and institutions run it, and how trades are settled. Learn definitions, roles and regulators precisely, then link them to settlement.
What this chapter covers
This chapter is the base of NISM-Series-VII. It gives you a map of the securities market: the participants, the instruments, the regulators, the intermediaries and infrastructure institutions, and a first look at how a trade is executed and settled.
The rest of the paper goes deep into clearing, settlement, risk management, depositories and related operations. Each of those later topics assumes you already know who does what. If you mix up a stock exchange, a clearing corporation and a depository here, later chapters become confusing.
The questions are mostly factual. Expect to be asked who performs a given role, which body regulates what, or which instrument has which feature. Your job is to learn the terms precisely and keep each role separate in your mind.
An introductory chapter looks easy, so many candidates skim it and lose marks they could have secured. Questions here are direct and definition based, so careful study turns into reliable marks. The chapter also sets up vocabulary and role clarity that every later chapter uses, so time spent here saves effort across the whole paper. With negative marking of 25% of the marks assigned to a question, guessing on half-remembered roles is costly, and clear knowledge protects your score.
Introduction to the Securities Market: topics in the order to study them
- 1Securities Market Overview and ParticipantsStart here to learn the market's purpose, its primary and secondary segments, and who the participants are.
- 2Securities Market InstrumentsOnce you know the participants, learn what they trade: equity, debt, derivatives and other products.
- 3Regulatory Framework and Market RegulatorsNext, learn who makes and enforces the rules, so the roles of the later institutions make sense.
- 4Market Intermediaries and Infrastructure InstitutionsNow study the exchanges, clearing bodies, depositories and intermediaries that work under that framework.
- 5Trading and Settlement OverviewFinish with the trade life cycle, which ties together everything you have learned and leads into later chapters.
How to prepare Introduction to the Securities Market
Treat this chapter as a role-mapping exercise. Your aim is to say, for any entity or instrument, what it is, what it does and who oversees it.
- Read the participants and market segments first, and write one line for each participant describing its role.
- Build a simple table in your notes of instruments against their key features, such as who issues them and what the holder gets.
- List each regulator and the area it oversees. Revise this list often, because regulator questions are easy to confuse.
- For intermediaries and infrastructure institutions, write what each does and what it does not do. This separates exchange, clearing corporation and depository.
- Trace a single trade from order to settlement in your own words, naming the entity involved at each step.
- Finish with practice MCQs on the chapter and review every wrong answer. Note whether it was a definition gap or a role mix-up.
- Revise the one-line notes the day before the exam and again just before the test.
Common mistakes in Introduction to the Securities Market
Mixing up the roles of stock exchange, clearing corporation and depository.
Fix: Write one line for each: platform for trading, clearing and settlement guarantee, and holding securities electronically. Test yourself on the lines.
Confusing primary and secondary market activity.
Fix: Ask whether the issuer receives the funds. If yes, it is the primary market. If investors trade among themselves, it is the secondary market.
Attributing a regulator's role to the wrong body.
Fix: Keep a short list of each regulator and its area, and revise it repeatedly until you can recall it without help.
Skipping this chapter as too basic.
Fix: Treat it as scoring material. Questions are direct, and the vocabulary is used throughout the paper.
Guessing on role questions with negative marking in force.
Fix: Eliminate options that describe a different entity's function. Answer only when you can justify the choice, since a wrong answer costs 25% of the question's marks.
Last-day revision: Introduction to the Securities Market
- Primary market is where securities are issued for the first time; secondary market is where existing securities are traded.
- Know each participant by role: issuers, investors, intermediaries and regulators.
- Equity represents ownership; debt represents a borrowing that the issuer must repay.
- SEBI is the main regulator of the securities market in India.
- An exchange provides the platform for trading; a clearing corporation handles clearing and settlement guarantees.
- A depository holds securities in electronic form; depository participants are its agents for investors.
- Brokers deal on behalf of clients; keep their role separate from that of the exchange.
- Infrastructure institutions support trading, clearing, settlement and holding of securities.
- A trade goes through order, execution, clearing and settlement in that sequence.
- Settlement means the exchange of securities and funds between buyer and seller.
- Read each question for the exact role or regulator asked about before choosing an option.
Introduction to the Securities Market practice questions
- An Indian company wants to list its equity shares on the main board of a stock exchange by offering shares to the public for the first time.…
- Ananya buys shares of a listed company through the secondary market on the NSE. Which statement best describes the company's position in thi…
- Rahul sells shares through his broker on a recognised stock exchange. In the structure of the Indian securities market, what is the main fun…
- Ravi Traders, a trading member, wants to know which type of instrument is NOT a security under the Securities Contracts (Regulation) Act, 19…
- A broker's client wants to know why a stock exchange is described as a 'self-regulatory organisation' (SRO) in the Indian securities market.…
- Which of the following is a function of a stock exchange's Investor Protection Fund (IPF) in the Indian securities market?
- Which of the following instruments is traded in the money market rather than the capital market?
- Which of the following best describes the primary function of the secondary market in securities?
Introduction to the Securities Market in other exams
The same ground in other exams, if you are preparing for more than one or want another angle on it.
Introduction to the Securities Market: frequently asked questions
What does the Introduction to the Securities Market chapter cover in NISM-Series-VII?
It covers the market overview and participants, instruments, the regulatory framework, intermediaries and infrastructure institutions, and an overview of trading and settlement. It sets the base for the operations and risk topics that follow.
Is this chapter difficult?
It is not calculation heavy. The challenge is precision, because roles and terms are close to one another. Careful revision of definitions and roles is enough to handle most questions.
How is NISM-Series-VII scored?
The exam has 100 questions for 100 marks in 2 hours, and the pass mark is 50%. Negative marking is 25% of the marks assigned to a question, so avoid blind guesses.
Which topic should I study first?
Start with the market overview and participants, then instruments, regulators, intermediaries and infrastructure institutions, and finally trading and settlement. This order builds from who and what to how.