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

Under SEBI's framework for Margin Trading Facility, the shares purchased by a client using MTF are held by the broker in which manner?

The broker must hold MTF-purchased securities in a separate, designated client demat account for margin trading collateral. This ensures segregation from the broker's own holdings and other client assets, protecting the client's interest and enabling proper monitoring of the funded positions.

  1. AIn the broker's own proprietary demat account
  2. BIn a separate client demat account designated for MTF collateralCorrect
  3. CWith the clearing corporation's bank account only
  4. DIn the client's physical custody as paper certificates

Explanation

Securities bought under MTF must be kept as collateral in a separate, designated demat account (the margin trading account) and not mixed with the broker's own holdings or other client assets. Holding them in the proprietary account would breach segregation norms.

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