Skip to content

NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Introduction to Securities Markets

Which of the following is a feature of a stock exchange's circuit breaker mechanism at the index level in India?

Index-based circuit breakers halt trading across the whole market when the benchmark index moves by specified percentages, such as 10%, 15% or 20%. They are a volatility control measure and have nothing to do with delisting, derivatives settlement prices or restrictions on a particular investor category.

  1. AIt permanently stops trading in a security that is delisted
  2. BIt halts trading market-wide when the index moves by specified percentagesCorrect
  3. CIt fixes the settlement price of derivatives contracts
  4. DIt restricts trading only for foreign portfolio investors

Explanation

Index-based market-wide circuit breakers apply when the benchmark index moves by pre-set thresholds of 10%, 15% or 20%, causing a trading halt across equity and derivatives segments. They do not concern delisting, settlement prices or investor category.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Securities Markets shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Securities MarketsFree diagnostic mock

More Introduction to Securities Markets questions