NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Risk Management

Under the SEBI framework on upfront collection of margins, a client buys index futures. Which of the following is the correct position regarding margin collection by the broker?

Under SEBI's upfront margin framework, the broker must collect margin from the client before the trade and report client-level margin collection to the clearing corporation. Delayed collection or exemptions based on prior dealing are not permitted, and the clearing corporation does not collect directly from the client.

1. AMargin may be collected at any time within a week after the trade
2. BMargin need not be collected if the client has traded with the broker before
3. CMargin must be collected upfront from the client before the trade is executed, and the broker must report client-level margins to the clearing corporationCorrect
4. DMargin is collected only by the clearing corporation directly from the client without involving the broker