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

A stockbroker offers clients a facility to borrow funds to buy shares, where the client pays a margin and the broker finances the balance, with the purchased shares held as collateral. Under the SEBI-framework, this broker-provided service is known as:

The service is Margin Trading Facility. The client pays only a part of the purchase value as margin, the broker funds the balance, and the purchased shares are held as collateral until the client repays the borrowed amount.

  1. AMargin Trading FacilityCorrect
  2. BSecurities lending and borrowing
  3. CPortfolio management service
  4. DEmployee stock option plan

Explanation

Margin Trading Facility lets clients buy securities by paying part of the value upfront while the broker funds the rest, with the securities held as collateral. SLB involves lending and borrowing securities, not funding purchases. PMS and ESOPs are unrelated to this arrangement.

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