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

A stock broker has received a client's signed Know Your Client form and rights and obligations document. Which statement about the broker-client agreement is correct?

The broker must provide the client a copy of the executed mandatory documents, and cannot impose terms beyond the prescribed format. The agreement applies to all clients regardless of segment and must be executed by both the broker and the client.

  1. AThe broker must give the client a copy of the executed documents and the client must not be forced into unilateral terms beyond the prescribed formatCorrect
  2. BThe broker may keep all executed documents and give copies only when the client asks in writing after one year
  3. CThe agreement is optional for clients who trade only in the cash segment
  4. DThe agreement need not be signed by the broker if the client has signed it

Explanation

Regulations prescribe mandatory documents that must be executed by both parties, and a copy must be given to the client. Additional terms cannot be imposed beyond the prescribed format. The other options contradict this requirement.

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