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

A stockbroker receives an order from a client who is not yet registered with it. Before the broker can execute the first trade for this client, which of the following must be completed?

The broker must first complete client registration by executing the KYC form and the mandatory rights and obligations document with the client. Only after on-boarding can trades be executed. SEBI does not approve individual clients, and full upfront margin is not a registration condition.

  1. AExecution of the Know Your Client form and the rights and obligations document with the clientCorrect
  2. BPayment of a margin equal to the full order value in advance
  3. CApproval from SEBI for each new client
  4. DOpening of a bank account in the name of the broker's director

Explanation

A broker must complete client registration, including the KYC form and the mandatory rights and obligations document, before dealing for the client. SEBI approval is not required for each client, and a full upfront margin is not a registration requirement.

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