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Test Objectives

NISM-Series-IIIA Securities Intermediaries Compliance (Non-Fund) Certification Examination

Part A – Understanding the Financial and Regulatory Structure in India

Unit 1: Introduction to the Financial System

1.1 Understand the Financial System

      -Describe the Financial System.

      -Explain the role of Financial Markets in an economy.

      -List out the different sub-types of the financial market.

1.2 Know about the Financial Market Intermediaries

     -Discuss in brief the roles played by each type of financial intermediary: Stock Brokers, Clearing House, Stock Exchanges, Depositories and Participants,

      Custodians, Registrars & Transfer Agents, Merchant Bankers, Investment Advisors, Portfolio Managers, Bankers to Issues, Mutual Funds etc

1.3  Define and Understand types of Financial Securities

      -Define ‘Security’ as per the SC(R)A, 1956.

      -Describe the main features of various financial instruments such as Equity, Shares, Preference Shares, Debentures, Bonds, Warrants, Derivatives, ADR, GDR,

       IDR, Mutual Fund Units, and Exchange Traded Funds.

      -Briefly describe other traded instruments such as Currency, Interest rate and their derivatives.

 

Unit 2: Regulatory Framework – General View

2.1 Know the Regulatory System in India

     -Explain the need for regulation.

     -Describe the overall framework of the Regulatory System: Government and Autonomous Regulation, Self Regulation, Interface with the Judicial System.

2.2 List the Financial Market Regulators and understand their role

     -Know about the different Regulators in the Indian financial System

     -Discuss the role of SEBI in Financial Market Regulation

     -Describe the role of RBI and IRDA, PFRDA and FMC in Financial Market   Regulation

2.3 Discuss the role of other regulators in the financial market: ROC, EOW, FIU-I, Police Authorities,                            

2.4 Understand the role of Appellate Authority

2.5 Discuss the Legislative Framework Governing the Financial market

    -Discuss the main Regulations and Rules that have an impact on the Compliance function.

    -Know about the applicable taxes on securities.

 

Unit 3: Introduction to Compliance

3.1 Understand the need for Compliance  

     -Understand the meaning of Compliance and compliance officer.  

     -Discuss the importance of appointment of compliance officer.

     -Describe the importance of compliance / ethics in Securities Markets.

3.2 Know the Role and Reporting Structure

     -Understand the scope and role of a compliance officer.

     -Know the Reporting Structure pertaining to Compliance Officer.

     -Explain the need for independence for the Compliance Officer to perform his function.

     -Explain the reporting responsibility of the Compliance Officers.

3.3 Understand the Responsibilities of COs towards Stakeholders:

     -List the responsibilities of a Compliance Officer to Stakeholders:

     -Explain the Regulatory requirement of a Compliance Officer and the duty to report violations to SEBI and other competent authorities.

3.4 Know the Compliance requirements under the SEBI (CAPSM) Regulations, 2007

 

Unit 4: SEBI Act, 1992

4.1 Understand the SEBI Act, 1992

     Discuss and understand SEBI Act from Compliance aspect:

  • Registration of Stock brokers etc
  • Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control
  • Various sub-Regulations related to Penalties and Adjudications etc.

 

Unit 5: Securities Contracts (Regulation) Act, 1956 and Securities Contracts (Regulation) Rules, 1957                  

5.1 Understand the following sections of the SC(R)A, 1956

  • Recognition of Stock Exchanges
  • Contracts and options in securities
  • Listing of securities
  • Penalties and Procedures

5.2 Understand the following Rules of the SC(R)R 1957

  • Audit of accounts of members
  • Withdrawal of recognition
  • Books of account and other documents to be preserved
  • Submission of annual reports and periodical returns
  • Requirements with respect to the listing of securities on a S.E

 

Unit 6: SEBI (Intermediaries) Regulations, 1992

6.1 Understand the SEBI (Intermediaries) Regulations.

6.2 Know the General Obligations of the Intermediaries.

6.3 Discuss the obligation of the intermediaries on inspection and on appointment of auditor or valuer.

6.4 Understand the action in case of default and manner of suspension or cancellation of certificate.

6.5 Know the Code of Conduct for intermediaries.

 

Unit 7: SEBI (Prohibition of Insider Trading) Regulations, 1992

7.1 Understand the SEBI (Prohibition of Insider Trading) Regulations, 1992 pertaining to;

  • Prohibition on dealing, communicating or counselling on matters relating to insider trading
  • Violation of provisions relating to insider trading
  • Code of internal procedures and conduct for listed companies and other entities
  • Disclosure of interest or holding by directors and officers and substantial shareholders in listed companies (initial & continual disclosure); disclosure by company to stock exchanges.

7.2 Discuss the Code of conduct for prevention of insider trading.

 

Unit 8: SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003

8.1 Understand the Regulation with respect to the prohibition of certain dealings in   securities.

8.2 Know the various prohibitions related to manipulative, fraudulent and unfair trade practices.

8.3 Describe the procedure for Investigation.

 

Unit 9A: Prevention of Money Laundering Act 2002, SEBI (Foreign Portfolio Investors) Regulations, 2013

9.1 Understand the significance of Anti-Money Laundering measures.

9.2 Discuss the General Obligations keeping in mind the anti-money laundering guidelines issued by SEBI:

  • Policies and procedures
  • Anti-Money Laundering Purposes

9.3 Highlights of SEBI Circular on AML/CFT

9.4 Understand the concept of Foreign Portfolio Investors

  • Categories of Foreign Portfolio Investor (FPI)
  • Eligibility Criteria of FPI
  • Understand the procedure of grant of certificate, suspension, cancellation or surrender of certificate
  • Understand the procedure for approval to act as designated depository participant
  • Know about the Investment Conditions and Restrictions for FPI’s
  • Discuss the general obligations and Responsibilities of FPI’s

 

Unit 10: SEBI (KYC Registration Agency) Regulations, 2011

10.1 Understand the registration process, conditions of initial and permanent registration.

10.2 Know the obligations when surrendering the certificate of registration.

10.3 Understand the Functions and Obligations of KRA and Intermediary.

10.4 Know the obligations of the KRA on inspection by SEBI.

 

Part B – Understanding Intermediary Specific Regulations

Unit 11: SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 

11.1 Discuss the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, highlighting the compliance requirements under the below mentioned sections:

  • Registration of Stock Brokers
  • Registration of Sub-Brokers
  • Registration of trading and clearing member
  • General obligations and responsibilities
  • Procedure for Inspection
  • Procedure for action in case of default
  • Code of conduct for Stock brokers
  • Code of conduct for Sub brokers
  • Regulation of transactions between clients and brokers
  • Transactions between clients and brokers
  • Unique Client Code
  • Capital Adequacy norms for brokers
  • Maintenance of books of account and other documents in the manner sought by the enforcement agencies
  • Inspection of brokers by Stock exchanges
  • Direct Market Access - operational specifications, risk management, broker to be liable for DMA trades
  • Fees payable by Stock Brokers

11.2 Discuss the SEBI (Alternate Investment Funds) Regulations, 2014

  • Understand Alternate Investment Funds (AIFs) , different categories and its Registration process
  • Know the registration process and the conditions of certificate
  • Understand the investment conditions and restrictions for AIFs
  • Know about the general obligations and responsibilities and transparency

Unit 12: SEBI (Merchant Bankers) Regulations, 1992, Listing Agreement and SEBI (Delisting of Securities) Guidelines, 2003, SEBI Takeover Code and SEBI (BuyBack of Securities) Regulations, 2006

12.1 Discuss the SEBI (Merchant Bankers) Regulations, 1992.

      -Define a merchant banker.

      -Know the procedure for registration as a merchant banker.

      -Know the eligibility criteria for grant of certificate and the capital adequacy requirement.

12.2 Understand the general obligations and responsibilities of the merchant banker.

       -Know the code of conduct followed by the merchant banker.

       -List the financial records which a merchant banker needs to maintain.

12.3 Know the obligations of the Merchant Banker as per the SEBI Takeover Code.

12.4 Know the main requirements under the Listing agreement of the Stock Exchanges

12.5 Discuss briefly the SEBI (Delisting of Securities) Guidelines, 2003

12.6 Understand the obligations of the Intermediary under the SEBI (Buyback of Securities) Regulations, 2006

 

Unit 13: SEBI (Issue of Capital Disclosure and Requirements) Regulations, 2009

13.1 Understand the ICDR Regulation from Merchant Banker aspect

13.2 Discuss the role of merchant bankers as advisors to the issuer company.

13.3 Detail the other key activities and related compliances undertaken by the merchant banker

13.4 Describe Post Issue process activity of the merchant banker.

 

Unit 14: SEBI (Depositories) Regulations, 1996

14.1 Understand the SEBI (Depositories) Regulations, 1996.

14.2 Discuss the Rights and Obligations of the Depositories.

14.3 Know the enquiry and inspection procedure followed by SEBI and the penalties.

 

Unit 15: SEBI (Depositories and Participants) Regulations

15.1 Understand the procedure of registration of a depository participant.

15.2 Know the rights and obligations of the depository participant.

       -List the documents related to records of services which need to be maintained.

15.3 Describe the investor grievance redressal mechanism.

15.4 Know the Code of conduct for participants and the action in case of any default.

 

Unit 16: SEBI (Bankers to an Issue) Regulations, 1994

16.1 Describe the procedure of application and registration as a Banker to an Issue.

16.2 Understand the general obligations and responsibilities of Banker to an Issue.

16.3 Know the Code of conduct for the Bankers to an Issue.

16.4 Highlight the obligations of a banker to an issue in case of inspection and the action taken by SEBI on the inspection and investigation report.

 

Unit 17: SEBI (Underwriters) Regulations, 1993

17.1 Discuss the role of an Underwriter

       -Understand the procedure of registration as an Underwriter.

       -Know the validity of the certificate of registration as an Underwriter.

17.2 Know the Capital Adequacy requirements as an Underwriter.

17.3 Know the Code of conduct for the Underwriters.

17.4 Highlight the general obligations and responsibilities as an Underwriter.

      -Know about the agreement with the clients.

      -List various books of account and records which need to be maintained.

17.5 Know the Obligations of underwriter on Inspection by SEBI.

 

Unit 18: SEBI (Debenture Trustees) Regulations, 1993

18.1 Understand the procedure of application and registration as Debenture Trustees.

       -List the conditions of registration.

       -Know the period of validity of certificate and the payment of fees.

18.2 Know the Capital Adequacy requirements as Debenture Trustees.

18.3 Understand the following general obligations and responsibilities.

18.4 Know the Code of conduct for the Debenture Trustees.

18.5 Know the Obligations of the Debenture Trustees on Inspection by SEBI.

18.6 List the various contents which should form a part of the trust deed.

18.7 Understand the process of dissemination of Information by Debenture Trustees.

 

Unit 19: SEBI (Credit Rating Agencies) Regulations, 1999

19.1 Describe the Registration process for Credit Rating Agencies.

      -Understand the application procedure

      -Know the eligibility criteria for application

19.2 Highlight the General Obligations of Credit Rating Agencies.

19.3 Discuss about the Restrictions on Rating:

  • Securities issued by Promoters
  • Securities issued by entities connected with Promoter etc
  • Securities already rated

19.4 Know the obligations of credit rating agency on inspection or investigation by SEBI.

19.5 Know Code of conduct of the Credit Rating Agencies.

19.6 Discuss the Guidelines issued by SEBI for Credit Rating Agencies.

           

Unit 20: SEBI (Custodian of Securities) Regulations, 1996

20.1 Understand the different Custodial Services.

20.2 Describe the eligibility criteria and the registration process.

      -Describe the Procedure of Application for grant of certificate.

      -Know the Capital Requirement.

      -Know the Period of Validity of Certificate.

20.3 Highlight the General Obligations and Responsibilities of Custodians.

20.4 Know the Code of Conduct.

20.5 Know the obligation of custodian on inspection conducted by SEBI.

 

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