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

A clearing member's proprietary trades and client trades are processed for clearing. Which statement about the handling of positions is correct?

Client positions must be maintained separately from the clearing member's proprietary positions and from other clients' positions. Each is tracked through its own client code, so that netting and margining are not mixed across different beneficiaries.

  1. AProprietary and client positions can be freely netted against each other to reduce margin
  2. BClient positions must be kept separate from the member's proprietary positions and from other clients' positionsCorrect
  3. COnly proprietary positions are reported to the clearing corporation
  4. DClient positions are held in the member's own name for simplicity

Explanation

Under SEBI and clearing corporation requirements, positions are tracked at the client level (via unique client codes) and kept distinct from the member's proprietary position. Netting across them would mix client and own risk, which is not permitted.

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