NISM Certifications · NISM-Series-VIII: Equity Derivatives · Sales Practices and Investors Protection Services
Before a trading member opens a derivatives account for a new client, which document is the client required to be given along with the account opening documents so that the client is made aware of the risks of trading in derivatives?
The client must be given the Risk Disclosure Document. It explains the risks of trading in equity derivatives, such as leverage and possible losses, and is supplied with the account opening documents so the investor understands the risks before trading.
- ARisk Disclosure DocumentCorrect
- BAnnual report of the exchange
- CContract note of the previous day
- DOffer document of the underlying company
Explanation
Trading members must give a new client a Risk Disclosure Document describing the risks of trading in equity derivatives. The other items are not part of the account opening risk disclosure requirement.
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