Skip to content

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

A client's margin shortfall arises during the trading day in the cash segment. Under exchange and SEBI norms, what is the consequence of a member failing to collect the required margin from the client?

A member who fails to collect the required margin from a client can be penalised by the exchange or clearing corporation for short or non-collection of margins. Margin collection is mandatory, not advisory, and the standard consequence is a penalty rather than automatic trade cancellation or immediate termination.

  1. AThe member may face penalties for short or non-collection of margins levied by the exchange or clearing corporationCorrect
  2. BNo consequence arises as margin is only advisory
  3. CThe client's trades are automatically cancelled by SEBI
  4. DThe member's membership is permanently terminated immediately

Explanation

Margin collection from clients is mandatory, and exchanges and clearing corporations levy penalties on members for short or non-collection of margins. It is not advisory. Trades are not automatically cancelled by SEBI, and termination is not the immediate standard result.

Did you get it right without looking?

One question tells you little. A timed set on Risk Management shows your real accuracy, how long you take and where you lose marks.

Practise Risk ManagementFree diagnostic mock

More Risk Management questions