Skip to content

NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to Securities Broking Operations

A broker receives a client's securities as collateral for margin. Under SEBI's current margin pledge framework, how must the client's securities be given to the broker for use as margin?

Securities must be given as margin through a margin pledge created in the depository system, and they remain in the client's own demat account. Transferring them to the broker's proprietary account or using a general power of attorney to move them is not allowed under the framework.

  1. AThrough margin pledge created in the depository system, with the securities staying in the client's demat accountCorrect
  2. BBy transferring them to the broker's own proprietary demat account
  3. CBy handing over a power of attorney for the broker to move them freely
  4. DBy issuing a post-dated cheque against them

Explanation

Under SEBI's framework, clients give securities as collateral through margin pledge, recorded in the depository system, while the securities remain in the client's own demat account. Moving them to the broker's own account or relying on a general power of attorney for such transfers is not permitted. A cheque is not a way of giving securities as margin.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Securities Broking Operations shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Securities Broking OperationsFree diagnostic mock

More Introduction to Securities Broking Operations questions