PGDM 311017

PGDQF3110117

pgpsm final

CSL311017

 National Institute of Securities Markets
Communiqué/Press Release

 

NISM-Series-VII: Securities Operations and Risk Management Certification Examination
NISM/Certification/Series-VII: SORM/2010/01 dated November 11, 2010

 

In exercise of the powers conferred by sub-regulation (3) of regulation 7 of the Securities and Exchange Board of India (Certification of Associated Persons in Securities Markets) Regulations 2007, National Institute of Securities Markets (NISM) in consultation with the Securities and Exchange Board of India hereby specifies the NISM-Series-VII: Securities Operations and Risk Management Certification Examination as the requisite standard for associated persons of a registered stock-broker / trading member / clearing member in recognized stock exchanges, involved in (a) assets or funds of investor or clients (b) redressal of investor grievances, (c) internal control or risk management and (d) activities having a bearing on operational risk.

The NISM-Series-VII: Securities Operations and Risk Management Certification Examination, offered by NISM, will be available from November 22, 2010.

Details of NISM-Series-VII: Securities Operations and Risk Management Certification Examination are given in Annexure-I and Annexure-II attached to this communiqué/press release.

The text of these Annexures and the registration details are available at www.nism.ac.in.

 

-sd-

M. L. Soneji
Registrar
National Institute of Securities Markets

 

Copy to:

  1. Executive Director, MIRSD, SEBI
  2. Executive Director, MRD, SEBI
  3. Executive Director, LAD
  4. MD& CEO, BSE
  5. MD& CEO, NSE
  6. MD& CEO, MCX-SX

 

 

Enclosures: Annexure I and II

 


  Annexure I – Syllabus Outline

 

NISM-Series-VII
Securities Operations and Risk Management Certification Examination

  

Objective of the Examination

The examination seeks to create a common minimum knowledge benchmark as the requisite standard for associated persons of a registered stock-broker / trading member / clearing member in recognized stock exchanges, involved in (a) assets or funds of investor or clients (b) redressal of investor grievances, (c) internal control or risk management and (d) activities having a bearing on operational risk.

On successful completion of the examination the candidate should:

  • Know the basics of the Indian securities market, the different products traded and the various market participants and the respective roles they play in the Indian securities market.
  • Understand the regulatory framework and the role of the Securities Exchange Board of India.
  • Know the various functions of the Front Office, Middle Office and Back Office in a Securities Broking Firm.
  • Understand the trade life cycle, the steps and participants involved in the trade life cycle and the role of the back office in a securities broking firm.
  • Understand how the risks are managed in a securities broking firm, the clearing and settlement process.
  • Understand the process of investor grievances redressal.

 Examination Specifications

This is a computer-based examination with multiple choice questions.
The examination consists of 100 questions of 1 mark each adding to 100 marks.
The examination should be completed in 2 hours.
There shall be negative marking of 25% of the marks assigned to a question.
The passing score for the examination is 50 marks.
 
Syllabus Outline with Weightages 
 

Unit 1

Introduction to Securities Markets

5%

Unit 2

Market Participants in the Securities Markets

10%

Unit 3

Introduction to Securities Broking Operations

20%

Unit 4

Risk Management

15%

Unit 5

Clearing Process

15%

Unit 6

Settlement Process

15%

Unit 7

Investor Grievances and Arbitration

10%

Unit 8

Other Services provided by Brokers

10%

 

 

 

 

 

 

 

 

 

 


 Annexure II- Test Objectives

 

NISM-Series-VII
Securities Operations and Risk Management Certification Examination

 

Chapter 1: Introduction to the Securities Market

1.1 Introduction

Explain the Indian Securities Markets, highlighting its role in Indian economy

1.2 Securities Market

Explain the primary and the secondary market, the different avenues for raising money from the public in the primary market, the two mediums in the secondary market, the OTC and the Exchange traded market.

1.3 Money Market

Define Money Market and the key features of the money market products.

1.4 Products Traded in the Market

Explain the different products available to the investors in the Indian Securities Markets; Define the Equity market and its products such as equity shares, debentures, warrants etc, Define the Derivative market and its products such as Index /Stock Futures, Explain Currency derivatives etc, Define the Debt market and its products such as the Government Securities Market and the Corporate Debt Market.

Chapter 2: Market Participants in the Securities Market

2.1 Introduction

Know the different market participants in the Indian Securities Market

2.2 Investors

List the different types of Investors based on their investment objectives, such as retail investors, high networth individuals and Institutional Investors

2.3 Issuers

Briefly introduce the Issuers who raise money from the securities market. Explain how money can be raised from international capital markets by way of GDRs, ADRs, FCCBs and ECBs.

2.4 Intermediaries

Explain about the Intermediaries in the Indian Securities Market viz., define what are stock exchanges, their role in the market, discuss about the Clearing Corporation /Agency and the role performed by them, Define and discuss who are trading members, depositories and depository participants and the Custodians.

2.5 Regulators

Explain the regulatory framework for the securities market in India and the role of Securities and Exchange Board of India.

 Chapter 3: Introduction to the Securities Broking Operations

3.1 Introduction to the Trade Life Cycle

Explain the Trade Life Cycle and the Steps and Participants involved in a trade life cycle. Explain how affirmation and confirmation for Institutional Clients are done; Explain how custodial transactions are executed, Define and Explain Clearing and Settlement of executed trades.

3.2 Front Office Operations

Understand the various Front Office Operations such as Client On-Boarding and Registration; Explain the role of sales in front office. Explain how an account is opened for trading purposes, the various documents required for it. Explain the importance of KYC and define Unique Client Code.

Explain Order Management, list the different types of orders and how orders are placed through internet or through phone, discuss and understand the process of order routing through the Exchange.

Explain how a trade is executed.

3.3 Middle Office Operations

Explain the various activities in a Middle Office in a securities broking firm, Explain Risk Management practices and the Surveillance mechanism in place

3.4 Back Office Operations

List the various activities in Back Office Operations. Define Trade Enrichment; Explain the procedure of trade allocation, Trade Confirmation/Modification. Discuss the Clearing and Settlement Process. Define accounting and the different accounts which a broker has to maintain.

Explain the role of Information Technology in a broking firm and understand the different Regulatory Compliances which a broker needs to comply.

 Chapter 4: Risk Management

4.1 Risk Management

Explain the Risk Management practices which a broker adheres to. Define and Explain Capital Adequacy Requirements, Explain Client Account Control, Explain Margin Requirements and discuss the functions and importance of the Margin Department

4.2 Compliances and Regulatory Reporting

Summarize Compliances and Regulatory Reporting. Explain the penalties levied if the brokers fail to maintain or furnish documents as prescribed under regulations. Discuss the various types of books to be maintained and the timeline for Submission of Various Periodic Reports. Explain why and how account statements are sent to the clients of the brokers.

 Chapter 5: Clearing Process

5.1 Introduction

Explain step by step the Clearing Process

5.2 Role of Clearing Agency

Explain the Role of a Clearing Agency in the clearing process of a trade.

5.3 Clearing Banks and their functions

Define Clearing Banks and explain their Functions

5.4 Clearing members / Custodians

Define and Explain Clearing Members/Custodians

5.5 Depositories and Depository Participants

Explain the role of Depository and Depository Participants

5.6 Clearing Process

Explain the Clearing Process. Differentiate between the clearing process in case of equities trading and in case of derivatives trading. Understand Determination of Obligation of Clients, Explain how Balancing/Netting of Client Accounts are done within the brokers firm and explain how broker netting is done within the Exchange.

 Chapter 6: Settlement Process

6.1 Settlement Cycle

Understand the Settlement Cycle

6.2 Settlement of Internet based trading and order placed on phone

Understand the settlement procedure in case of Internet based trading and order placed on phone

6.3 Settlement of Funds

Understand the Settlement of Funds, how obligations are informed to the clients and custodians, Understand Margin Payments and Explain about settlement dues.

6.4 Settlement of Securities

Understand the Settlement of Securities; Explain the settlement process through the depository clearing system

6.5 Corporate Actions Adjustment

Understand what are corporate actions and what are Corporate Actions Adjustment; Discuss about Corporate Actions to be adjusted and the Time of Adjustment, Discuss about Methodology for Adjustment

6.6 Auction of Securities

Understand the procedure for Auction of Securities. Explain when auction is carried out. Explain the auction of securities on the BSE and on the NSE.

Chapter 7: Investor Grievances and Arbitration

7.1 Introduction

Explain the importance of investors and how the grievances of the investors are redressed

7.2 Investor Grievance

Procedure followed to redress investor grievances

7.3 Arbitration

Understand what arbitration is and the exchange procedure to handle arbitration matters. Explain the role of appellate arbitration.

Chapter 8: Other Services Provided by Brokers

8.1 Introduction

Explain the various other services which a broker offers to its investors.

8.2 IPO applications

Explain how IPO applications are treated at brokers end. Explain the procedure of collection of IPO application forms and explain the newly launched ASBA facility.

8.3 Trading of Mutual Fund units

Explain how mutual funds units are traded on the exchange.

8.4 Portfolio Management Service

Explain what Portfolio Management Service is and how do broker engage in PMS.

8.5 Research Reports

Explain the role of research in a broking firm

8.6 Depository Services

Explain the Depository Services provided by the brokers.

8.7 Margin Trading

Explain the concept of margin trading and its importance.  

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