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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Other Services Provided by Brokers

A broker has a client who trades through an internet-based trading platform. Which of the following is correct regarding the broker's obligation for such trading under SEBI rules?

The broker must ensure secure client authentication and maintain audit trails of orders and trades. Internet trading needs exchange permission and system audits, credentials cannot be shared with dealers, and records must be kept far longer than a month.

  1. AThe broker must ensure the client authentication with secure login, and maintain audit trails of ordersCorrect
  2. BInternet trading requires no exchange approval or system audit
  3. CThe broker may share a client's login credentials with its dealers for convenience
  4. DOrder and trade logs need to be retained only for one month

Explanation

Internet-based trading requires exchange approval, secure authentication, system audits and retention of order and trade logs as an audit trail. Sharing credentials is a breach, and the log retention is far longer than one month, so those options are incorrect.

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