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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Other Services Provided by Brokers

In the context of Internet-based trading offered by brokers, which of the following best describes the broker's primary obligation regarding the security of client login credentials?

A broker offering internet trading must ensure secure client authentication, such as two-factor authentication, to protect accounts from unauthorised access. Sharing passwords, plain-text storage or shared logins violate the security requirements for online trading systems.

  1. AShare the client's password with the dealer for quicker order entry
  2. BEnsure secure authentication, such as two-factor authentication, for client access to the trading systemCorrect
  3. CAllow a single login to be shared by all family members
  4. DStore passwords in plain text for easy recovery

Explanation

Brokers offering internet trading must have robust security, including two-factor authentication, to protect client access. Sharing or storing passwords in plain text, or allowing shared logins, would weaken security and breach the required controls.

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