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

A stockbroker offers a client a facility to buy shares by paying only a part of the transaction value upfront, with the broker funding the balance against the shares as collateral, subject to SEBI rules. Which service is this commonly called?

This is Margin Trading Facility (MTF). The client pays only a portion of the transaction value as margin, and the broker funds the balance, holding the purchased shares as collateral, under SEBI and exchange conditions governing such funding.

  1. AMargin Trading Facility (MTF)Correct
  2. BPortfolio Management Service
  3. CSecurities lending through the exchange
  4. DAlgorithmic trading

Explanation

Margin Trading Facility lets clients buy securities by paying a part of the value (the margin) while the broker finances the rest, with purchased shares held as collateral. PMS involves discretionary management, SLB involves lending of securities, and algo trading is order automation, so none of them describe this.

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