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

An investor buys shares of a listed company through a stockbroker on the NSE cash segment. Which statement best describes the role of the stock exchange in this trade?

The exchange provides the trading platform where orders are matched anonymously and trades are executed. The clearing corporation, not the exchange itself, handles clearing and guarantees settlement. The exchange neither issues shares, lends securities nor pays sellers from its own funds.

  1. AIt provides a platform for anonymous order matching and trade execution, while the clearing corporation handles settlement guaranteeCorrect
  2. BIt lends shares to the buyer to complete delivery
  3. CIt directly pays the seller from the exchange's own funds before settlement
  4. DIt issues the shares to the investor as the issuer

Explanation

Exchanges provide a screen-based order matching platform. Clearing and settlement guarantee is handled by the clearing corporation. The exchange does not issue shares or fund the trade.

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