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

A person wants to start trading in the cash segment through a stock broker. Which document must the broker obtain from the client as part of the account opening process, in addition to the Know Your Client form, before the client's account is activated?

The broker must obtain the client's acknowledgement of the Rights and Obligations document and the Risk Disclosure Document along with the KYC form. Bank guarantees, previous-broker NOCs or audited balance sheets are not mandatory for opening an ordinary retail trading account.

  1. AA signed Rights and Obligations document and risk disclosure document, with acknowledgement of receiptCorrect
  2. BA bank guarantee equal to 10% of the intended trading limit
  3. CA no-objection certificate from the client's previous broker
  4. DAn audited balance sheet of the client for the last three years

Explanation

Standard account opening documentation comprises the KYC form, the Rights and Obligations document and the Risk Disclosure Document, which the client acknowledges. A bank guarantee, NOC from a previous broker or audited balance sheet is not a mandatory account-opening requirement for an ordinary retail client.

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