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

A stockbroker wants to offer clients a facility to invest in IPOs through its trading platform using the UPI mechanism. Which statement best describes the broker's role in the application process?

The broker acts as a syndicate member or registered intermediary that collects client bids and uploads them to the exchange bidding platform. It does not fix the price, allot shares or finalise the basis of allotment, which are done by the issuer, lead managers and the registrar.

  1. AThe broker acts as a syndicate member or registered intermediary collecting bids and uploading them to the exchange bidding platformCorrect
  2. BThe broker allots shares directly to clients from the issuer's reserved quota
  3. CThe broker decides the issue price on behalf of retail clients
  4. DThe broker acts as the registrar and finalises the basis of allotment

Explanation

Brokers who are syndicate members or registered intermediaries accept IPO applications and upload bids to the exchange bidding system. Allotment is finalised by the registrar with the issuer and the exchange, and price is set by the issuer with the lead managers, so the other options misstate the role.

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