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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Operational Aspects of Investment Management

A client's trade in a listed equity share is executed on a recognised exchange. Which entity guarantees settlement of the trade between the buying and selling members?

The clearing corporation of the exchange guarantees settlement of trades between members by acting as the central counterparty. Investment advisers, registrars and rating agencies do not guarantee settlement, as their roles are advice, share record keeping and credit rating.

  1. AThe clearing corporation of the exchangeCorrect
  2. BThe investment adviser of the client
  3. CThe registrar and transfer agent of the company
  4. DThe credit rating agency covering the issuer

Explanation

The clearing corporation acts as central counterparty and guarantees settlement of trades through its settlement guarantee mechanism. Advisers, registrars and rating agencies perform advice, record keeping and rating roles respectively.

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