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

Before a retail client is allowed to trade in equity derivatives through a trading member, which document is generally required to be executed in addition to the account opening form?

The client must acknowledge the risk disclosure document for the derivatives segment. It informs the investor about the high risk and leverage in derivatives trading. Full-value bank guarantees, issuer NOCs or hold-to-expiry undertakings are not required for onboarding.

  1. ARisk disclosure document for the derivatives segment acknowledged by the clientCorrect
  2. BA bank guarantee equal to the full contract value
  3. CA no-objection certificate from the issuer of the underlying stock
  4. DAn undertaking to hold every position until expiry

Explanation

Members must make clients aware of the risks of derivatives trading, and clients acknowledge a risk disclosure document. A bank guarantee for full contract value, an issuer NOC and a compulsory hold-to-expiry undertaking are not required.

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