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

A client opens a trading account with a stockbroker. Which document is the one-time agreement that sets out the rights and obligations between the broker and the client and must be signed at the time of account opening?

The member-client agreement is the document signed once at account opening. It sets out the rights and obligations of the broker and the client. A contract note, by contrast, is issued after trades are executed, and statements only report balances or margins.

  1. AContract note
  2. BMember-client agreementCorrect
  3. CMargin statement
  4. DRetention statement

Explanation

The member-client agreement is the standard document executed at on-boarding that records the rights and obligations of the broker and the client. A contract note is issued after each trade execution, not at on-boarding. Margin and retention statements are periodic statements and are not agreements.

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