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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Sales Practices and Investors Protection Services

Which practice by a derivatives sales person is consistent with fair investor protection?

Explaining that futures losses can exceed the initial margin is the proper practice. Fair sales conduct requires honest risk disclosure, because leveraged positions can lose more than the deposit. Guaranteeing returns or describing option writing as low-risk misleads investors.

  1. AGuaranteeing a minimum return on a futures position
  2. BExplaining that losses on futures can exceed the initial margin paidCorrect
  3. CAdvising clients to ignore MTM calls
  4. DAssuring that option writing has limited risk

Explanation

Members must disclose risks honestly. Futures losses can exceed the margin deposited, so explaining this is proper. Guaranteeing returns, ignoring calls, or calling option writing limited-risk are misleading.

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