Skip to content

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

A trading member's sales person recommends a derivatives strategy to a retail client without checking the client's financial position or experience. Which sales practice principle is mainly violated?

The principle violated is Know Your Client and suitability assessment. Before recommending derivatives, an intermediary must understand the client's financial position, experience and risk tolerance, so that advice matches the client's profile. Ignoring this exposes retail clients to unsuitable, high-risk products.

  1. AKnow Your Client and suitability assessmentCorrect
  2. BContract note issuance within 24 hours
  3. CMark-to-market settlement
  4. DPosition limit reporting

Explanation

Sales practices require the intermediary to understand the client's financial status, experience and risk appetite before recommending products. Skipping this violates KYC and suitability. The other options relate to operations or risk management, not recommendation of products.

Did you get it right without looking?

One question tells you little. A timed set on Sales Practices and Investors Protection Services shows your real accuracy, how long you take and where you lose marks.

Practise Sales Practices and Investors Protection ServicesFree diagnostic mock

More Sales Practices and Investors Protection Services questions