NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Clearing Process
A broker's client Mr. Rao buys 500 shares at Rs 200 on day T. The broker's obligation for pay-in to the clearing corporation is computed on which basis?
Pay-in is based on the clearing member's net obligation, calculated across all its clients' trades in each security for the settlement, not on a single client's gross purchase, sell-only positions or the face value of shares.
- ANet obligation of the clearing member across all its clients' trades in that security for the settlementCorrect
- BOnly Mr. Rao's individual gross purchase value
- COnly the sell obligations of the broker
- DThe face value of the shares bought
Explanation
Clearing corporations compute obligations on a net basis for each clearing member per security (and funds) for a settlement, not on one client's gross trade. Face value is irrelevant to pay-in funds.
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