NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Market Participants in the Securities Market
A trading member wants to carry out trades on behalf of clients but does not wish to clear and settle the trades itself, instead relying on another member to do so. Which type of member is the other member that clears and settles such trades?
The trades are cleared and settled by a professional clearing member. This type of clearing member only clears and settles trades on behalf of other trading members and does not trade on its own account, unlike a self-clearing member, which handles only its own and its clients' trades.
- AProfessional clearing memberCorrect
- BSelf-clearing member
- CTrading-cum-clearing member only for its own trades
- DSub-broker
Explanation
A professional clearing member clears and settles trades for others, such as trading members, without trading itself. A self-clearing member clears only its own and its clients' trades, and a sub-broker is an agent of a broker, not a clearing member.
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