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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Settlement Process

A broker has a net obligation in a stock on a trade date: it bought 3,000 shares at Rs 200 in one trade and sold 1,800 shares at Rs 210 in another trade, both for the same client-wide pool and same settlement. What is the broker's net securities position and net funds position for that settlement?

The broker has a net buy of 1,200 shares and must pay a net Rs 2,22,000. Purchases cost Rs 6,00,000 and sales bring Rs 3,78,000, so the difference of Rs 2,22,000 is payable at pay-in on settlement.

  1. ANet buy of 1,200 shares; net funds payable Rs 2,22,000Correct
  2. BNet buy of 1,200 shares; net funds payable Rs 6,00,000
  3. CNet buy of 4,800 shares; net funds payable Rs 9,78,000
  4. DNet sell of 1,200 shares; net funds receivable Rs 2,22,000

Explanation

Net shares: 3,000 bought minus 1,800 sold gives a net buy of 1,200. Funds: purchase 3,000 x 200 = Rs 6,00,000 payable; sale 1,800 x 210 = Rs 3,78,000 receivable; net payable Rs 2,22,000. Rs 6,00,000 ignores the sale proceeds. Check: 6,00,000 - 3,78,000 = 2,22,000.

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