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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Sales Practices and Investors Protection Services

A trading member's client wants to take a large derivatives position, but the member's sales representative suggests the client should first complete the KYC process. Which document set is essential before a client can trade in the F&O segment through a broker?

A client must complete KYC, sign the member-client agreement and acknowledge the Risk Disclosure Document before trading F&O. Documents such as a lone demat statement, bank statement or exchange letter of credit do not satisfy the onboarding requirements for derivatives trading.

  1. AOnly a demat account statement
  2. BA completed KYC and a signed client-broker agreement with the Risk Disclosure Document acknowledgedCorrect
  3. COnly a bank statement for six months
  4. DA Letter of Credit issued by the exchange

Explanation

Before trading in derivatives, a client must be KYC-compliant, execute the client-broker agreement (Member-Client Agreement) and receive the Risk Disclosure Document. A demat statement or bank statement alone is insufficient, and no exchange Letter of Credit is required for a retail client.

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