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

Which statement about investor protection in the equity derivatives segment is correct?

The exchange's Investor Protection Fund can compensate clients of a defaulting trading member up to prescribed limits. Clients do have recourse, and arbitration is open to all investors without needing to go to a civil court first.

  1. AInvestor Protection Fund of the exchange can be used to compensate clients of a defaulting member subject to prescribed limitsCorrect
  2. BClients have no recourse if a member defaults
  3. COnly institutional clients can approach the exchange for arbitration
  4. DArbitration is available only after going to a civil court

Explanation

Exchanges maintain an Investor Protection Fund to compensate clients of defaulter members up to specified limits, and arbitration and investor grievance mechanisms are available to all clients without first approaching a civil court.

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