Skip to content

NISM Certifications · NISM-Series-XV: Research Analyst · Legal and Regulatory Environment (NISM XV)

Which of the following best describes a restriction on a research analyst regarding trading in securities that are the subject of the analyst's research report?

A research analyst must not trade ahead of publishing a report or trade contrary to the recommendation, and must observe the prescribed restrictions around publication. Free trading before release would be front running and a conflict of interest. Client approval is not the test.

  1. AThe analyst may trade freely at any time before the report is published
  2. BThe analyst must not trade in the securities in a way that conflicts with the recommendation, including trading ahead of the report's publication, and should follow the prescribed restrictions around publicationCorrect
  3. CThe analyst may trade only if the client approves in writing
  4. DThe analyst may trade only on the day after the stock exchange publishes the report

Explanation

The regulations and code of conduct prohibit trading ahead of a report and require that personal dealing not conflict with the recommendation, with restricted windows around publication. Free trading before publication would amount to front running. Client approval or the exchange does not govern the matter.

Did you get it right without looking?

One question tells you little. A timed set on Legal and Regulatory Environment (NISM XV) shows your real accuracy, how long you take and where you lose marks.

Practise Legal and Regulatory Environment (NISM XV)Free diagnostic mock

More Legal and Regulatory Environment (NISM XV) questions