NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market
Ravi Traders, a trading member, wants to know which type of instrument is NOT a security under the Securities Contracts (Regulation) Act, 1956 definition commonly covered in NISM material. Which one is it?
A fixed deposit receipt issued by a bank is not a security for securities market purposes. Shares, government securities and mutual fund units fall within the definition of securities under the Securities Contracts (Regulation) Act, while a bank deposit is a banking contract.
- AShares of a company
- BGovernment securities
- CUnits of a mutual fund scheme
- DA fixed deposit receipt issued by a scheduled bank to a customerCorrect
Explanation
Shares, government securities and mutual fund units are covered within the definition of securities. A bank fixed deposit receipt is a non-negotiable deposit contract and is not a security traded in the securities market.
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