Skip to content

NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Other Services Provided by Brokers

A stock broker offers a margin trading facility (MTF) to a client. Which statement is correct as per the exchange and SEBI framework?

Under MTF, only securities that meet the exchange's eligibility criteria can be bought, and the purchased securities are held as collateral for the funding. Brokers need prior exchange permission, and they cannot use client securities for their own proprietary purposes.

  1. ASecurities purchased under MTF may be any security, including those not in the F&O segment or not meeting exchange criteria
  2. BSecurities under MTF must be held as collateral by the broker, and only eligible securities specified by the exchange can be boughtCorrect
  3. CThe broker can use the client's MTF securities as its own proprietary collateral
  4. DMTF can be offered by any broker without informing the exchange

Explanation

MTF is available only to brokers who have been permitted by the exchange, and only eligible (stipulated) securities may be purchased under it. The securities are held as collateral for the funding and cannot be used for the broker's own purposes. Using client securities for own use or ignoring exchange eligibility violates the rules.

Did you get it right without looking?

One question tells you little. A timed set on Other Services Provided by Brokers shows your real accuracy, how long you take and where you lose marks.

Practise Other Services Provided by BrokersFree diagnostic mock

More Other Services Provided by Brokers questions