PGDM 311017



pgpsm final


National Institute of Securities Markets
Communiqué/Press Release
NISM-Series-II-A: Registrars to an Issue and Share Transfer Agents - Corporate Certification Examination
NISM/Certification/Series-II-A: RTA-Corp/2009/3 dated August 3, 2009

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-II-A: Registrars to an Issue and Share Transfer Agents - Corporate Certification Examination as the requisite standard for the associated persons employed or engaged or to be employed or engaged by Registrars to an Issue and Share Transfer Agents for performing any of the following functions for listed companies:

  1. dealing or interacting with the investors or issuers;
  2. dealing, collecting or processing applications from the applicants;
  3. dealing with matters relating to corporate actions, refunds or redemptions, repurchase of securities, etc;
  4. handling redressal of investors’ grievances;
  5. responsible for internal control and risk management;
  6. responsible for any compliance of securities laws;
  7. responsible for any other activity performed under the Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993.

The NISM-Series-II-A: Registrars to an Issue and Share Transfer Agents - Corporate Certification Examination is offered by NISM. The examination is available to the candidates from August 7, 2009.

Details of NISM-Series-II-A: Registrars to an Issue and Share Transfer Agents - Corporate 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 may be found at www.nism.ac.in.  

Officer on Special Duty
National Institute of Securities Markets
Copy to:
  1. Executive Director, MIRSD, SEBI
  2. Executive Director, LAD, SEBI
  3. Executive Director, DNPD, SEBI
  4. CEO, BSE
  5. CEO, MCX-SX
  6. CEO, NSE



Annexure- I
 NISM-Series-II-A: Registrars to an Issue and Share Transfer Agents - Corporate Certification Examination

 Objective of the Examination

 The examination seeks to create a common minimum knowledge benchmark for persons working in Registrars to an Issue and Share Transfer Agents (R&T agent) organizations in the corporate R&T function, in order to enable better quality investor service, operational process efficiency and risk controls.

 On successful completion of the examination the candidate should:

  • Know the basics of securities and securities markets
  • Understand broadly the role and functions of the RTAs in the corporate securities issuance and transaction process.
  • Know the regulatory environment in which the RTAs operate in India.

Functional Coverage

The examination will be mandatory for all associated persons employed or engaged by Registrars to the Issue and Share Transfer Agents (RTA) and performing RTA functions for listed companies.

 Examination Specifications

This is a computer-based examination with multiple choice questions.
The Examination will consist 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 will be 50 marks.

Syllabus Outline with Weightages


Unit 1

Introduction to Securities


Unit 2

Characteristic of Equities


Unit 3

Characteristics of Other Securities


Unit 4

Characteristics of Debt Securities


Unit 5

Basics of Mutual funds


Unit 6

SEBI - Role and Regulations


Unit 7

Public Offer of Securities – Features and Processes


Unit 8

Depository Services and Related Processes


Unit 9

Investor Servicing Processes


Unit 10

Stock exchanges – Role, Listing













Annexure- II 
NISM-Series-II-A: Registrars to an Issue and Share Transfer Agents - Corporate Certification Examination

Test Objectives

 Unit 1: Introduction to Securities

1.1  Describe the broad categorization of securities as equity and debt.

1.2  Identify, from a list of different types of securities, those that represent ownership in a corporation and those that represent creditors.

1.3  Describe benefits to equity investors – dividend, growth, ownership.

1.4  Identify and describe the essential features of equity securities – uncertain payouts, perpetuity, and secondary market.

1.5  Identify and describe essential features of debt securities – interest payment, maturity, credit rating

1.6  Describe benefits to investors in debt – interest, redemption, right to assets

1.7  Describe hybrid structures - preferred and convertible instruments

Unit 2: Characteristics of Equities

2.1 Understand the rights of common shareholders.

2.2  Distinguish par value and share premium for equity shares.

2.3  Understand the concept of Dividend

Identify dividend as the payout to equity investors and that it is not a pre-defined or fixed rate

Identify dividend as payable on the face value and not current value of an equity share

Solve a simple problem on rate of dividend and amount of dividend

2.4  Describe the terms authorized capital, issued capital, outstanding shares, paid-up shares and share buy-back and match them to the appropriate definitions.

2.5  Distinguish the characteristics of preferred shares from those of common shares.

Identify that preferred shares are normally privately placed with investors as opposed to a public offering.

Identify the preferences of preferred share holders regarding dividends and assets in contrast to those of common shareholders and bondholders.

2.6  Identify the purpose of a rights offering as a preemptive right of shareholders to preserve their proportionate ownership in a corporation at the time additional shares are issued.

Unit 3: Characteristics of Other Securities

3.1  Identify the purpose of a warrant offering as a means to make an offering of new securities, usually debt securities, more attractive to investors. Contrast with a rights offering.

3.2  Identify the purpose of a convertible bond offering, to convert debt to equity over time, and manage cash flows.

3.3  Identify the purpose of Depository Receipts (DRs) and Fully Convertible Currency Bonds (FCCBs) to facilitate cross border trading and settlement, minimize transaction costs, and broaden the potential investor base, especially among institutional investors.

3.4  Understand Depository Receipts

Define a DR as a negotiable instrument in the form of a certificate denominated in US dollars issued against certain underlying securities.

Identify that certificates are issued by a depository bank that has a claim on securities deposited by the issuing corporation with a domestic custodian bank.

Identify the right of DR holders to receive dividends and other payments when authorized by the underlying corporation, but NOT the right to vote on corporate matters. 

Unit 4: Characteristics of Debt Instruments

4.1  From a list of different types of securities, identify those that represent the debt of a corporation.

Distinguish the characteristics of corporate debt securities from those of common and preferred shares.

Define the payment terms of corporate debt securities to include the face value, coupon and term to maturity.

4.2 Distinguish the face value of a corporate debt security from the market value.

4.3  Define current yield

Distinguish the coupon of a corporate debt security from its current yield.

Distinguish the yield to maturity of a corporate debt security from its yield.

4.4  Types of debt securities

Identify the distinguishing characteristic of bonds, debentures, deep bonds and convertible debt securities.

Identify and distinguish the relative advantages and disadvantages to and investors of the convertibility feature of corporate debt securities.

4.5  Identify, define and distinguish among the methods of corporate debt retirement to include the call feature, the put feature, and redemption.

Identify the advantage(s) of the call feature to the issuer of corporate debt securities.

Identify the advantage(s) of the put feature to the issuer of corporate debt securities.

4.6  Fixed and Floating rate instruments

Identify and define the features of a floating rate bond.

Differentiate a fixed coupon and a floating rate bond.

Describe floating rate benchmarks and reset frequency.

4.7  Credit Rating

Identify the role of credit rating agencies with respect to the ability of issuers of corporate debt securities to make regular interest payments and to repay the face value at maturity.

Identify credit rating symbols.

Describe the nature of unrated bonds.

Identify SEBI’s role in setting standards for credit rating agencies.

4.8  Money market instruments

Identify the essential characteristics of money market instruments to include short-term maturity, and low risk.

Identify the distinguishing characteristics of the three types of money market instruments—treasury bills, commercial paper and certificates of deposit.

4.9 Identify the risk implications for government debt issues versus corporate debt securities.

4.10 Company Fixed Deposits

Identify the basic features of company fixed deposits to include a fixed interest rate, a defined term to renewal or refunding and the unsecured nature of the obligation.

Identify the distinction between company fixed deposits making periodic interest payments versus those providing for cumulative payments of interest and principal at maturity.

Identify the effect of longer terms to renewal or refunding on company deposit interest rates.

Identify investor ownership of a company fixed deposit evidenced by a non-transferable fixed deposit receipt issued by the company registrar.

Unit 5: Basics of Mutual Funds

5.1 Understand Mutual Funds

Define a mutual fund product as a portfolio of securities.

fund objective. Identify objective of a fund and associate it with the portfolio.

Define units of a fund, face value and ongoing value.

5.2  Understand the benefits of mutual funds to investors.  List these benefits.

5.3  Describe and distinguish open and closed end funds, in terms of unit capital, ongoing transactions and investors’ liquidity.

5.4  Describe how units of fund change with investor transactions.

5.5  Define Assets under Management (AUM) of a portfolio and fund management fees.

Describe how value of a unit changes with changes in the AUM.

Identify value of securities as the cause for changes in AUM.

Describe how AUM can move up or down every day.

5.6  Define and describe NAV of a fund.

5.7  Unit Capital

Describe how unit capital can move up or down every day.

Describe issuance of fractional units.

Solve a simple problem on amount invested or redeemed and units.

Solve a simple problem on NAV, AUM and units, for one unknown.

5.8  Types of Mutual Fund products

Describe mutual fund products and their classification into equity, debt, hybrids and money market.

Associate mutual fund products with the securities they invest in.

5.9  Dividends and Capital Gains

List the payouts to investors in mutual funds as dividends and capital gains.

Indicate how investment options enable choosing between dividends and capital gains.

Unit 6: SEBI – Role and Regulation

6.1   Understand the securities market regulatory environment

6.2   Identify the SEBI mission and contrast it to the purposes for which other financial regulatory authorities were established.

6.3   Name SEBI as the government agency with authority to register and regulate stock exchanges and contrast with the roles of other financial regulatory authorities.

6.4   Identify SEBI’s powers to:

Conduct investigations of all market participants

Adjudicate offenses and penalize violators

Register and regulate market intermediaries

Standards of disclosure for issuers

Regulation of securities exchanges

6.5 Name SEBI rules and regulations specifically aimed at investor protection

Prohibition of insider trading on non-public information

Prohibition of fraudulent and unfair trade practices

6.6  Identify the statutory basis for the Investor Education and Protection Fund (IEPF) from a list of potential acts.

Identify the funding sources for the IEPF to include unclaimed dividends, interest, allotment application fees, matured deposits and debentures, and government grants and investment income of the period.

Identify the purpose of the IEPF.

6.7  Know SEBI Regulations Relevant for Registrars and Transfer Agents

Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993

Securities and Exchange Board of India (Intermediaries) Regulations, 2008

Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996

Unit 7: Public Offer of Securities- Features and Processes

7.1  Know the various types of Issues

Define initial and follow-on public offerings and distinguish between them.

Define and distinguish among a private placement, a preferential allotment, and a QIP placement of securities.

7.2  Define underwriting

7.3  Define the green shoe option that may be included in the underwriting agreement and distinguish from an additional allotment in case of a shortfall and lock-in provision.

7.4  Identify the sequence of events and describe the underlying processes in a public offering including:

Preliminary red herring prospectus, Issue advertisements, Red herring prospectus, Final prospectus, Issue registration effective, Closing of bids

Define a red herring prospectus and distinguish it from the preliminary red herring prospectus and the final prospectus.

Identify that under The Companies Act all initial public offerings (IPOs) must be issued in dematerialized form and be listed on an exchange.

7.5  Identify the purpose of the SEBI Disclosure and Investor Protection (DIP) Guidelines to set minimum disclosure standards for issues and to set minimum standards for the conduct of securities offerings.

7.6   Identify the features of a Fixed Price Offering and distinguish it from a Book Built Offering.

7.7   Know various investor categories

Identify the classes of investors (QIBs, NIIs, RIs) and their respective allotments of shares of a new issue.

Identify the manner in which the shares are reserved for bidders within each allotment category.

Identify the payment terms for the three classes of investors and distinguish among them.

7.8   Understand the bidding process

Identify the features of the bidding process including an electronic exchange platform

Define cut-off price in a public offering.

7.9   Describe terms of finalising the list of eligible allottees, reconciliation, dematerialization, credit and rejections.

7.10 Describe the process of submission of “basis of allotment” to stock exchanges such as:

Documents to be submitted to exchanges

Lock-in provisions for pre IPO shares

Fulfillment of sector caps

Sending of Confirmation of Allotment Notices (CANs)

Dispatching refund orders or directly crediting allottee accounts

7.11 Describe processing of responses for mandatory open offers

7.12 Describe processing of buy backs, and tender offers

7.13 Describe the processing of corporate actions such as dividends, bonus, splits and consolidation

7.14 Describe the Role of the Transfer Agent in dealing with physical certificates:

Dematerialization (Demat)/ Rematerialization (Remat) of securities certificates

Reconciliation of daily balances

Transfer of ownership of physical securities

Issue of duplicate certificates

Stop Transfer for certificates reported Lost/ Stolen

Issue of new certificates in corporate reorganizations 

Unit 8: Depository Services and Related Processes

8.1 Basic Features of Depositories

Identify the purposes of the Depository Act of 1996 and contrast with features of the physical certificate regime.

Name the securities depositories in India.

Describe the Role of the Depositories specially relating to Dematerialization of certificates and fungibility of securities

Identify how ownership of dematerialized securities is reflected at the issuer and at the securities depository.

8.2 Identify that a depository participant (DP) must be a financial intermediary by correctly selecting examples of such intermediaries.

8.3  Describe how investors avail themselves of the depository’s services through accounts maintained with DPs.

Describe how investors authorize transfers of securities by submitting signed Delivery Instruction Slips to DPs.

Describe investor rights with depositories relating to their option to being beneficial owners; rights of beneficial owners and rights to record pledges/hypothecations

Identify the investor right to receive periodic statements of accounts regarding securities held in the depository.

Identify the rights of the beneficial owners, including the option for beneficial owners to receive a physical certificate.

8.4  Describe processes in depositories, DPs and R & T Agents relating to Dematerialization and Rematerialization of securities including:

Providing information to issuers

Downloading beneficiary positions to R & T Agents

Reflecting corporate actions (cash / non-cash distributions, buybacks, reorganizations) on depository records

8.5  Differentiate market and off market trades and describe processes related to Trading and Settlement of market and off-market trades

8.6  Describe the process of reconciliation of records between the Depository and R&T Agent.

Unit 9: Investor Servicing Processes

9.1  Describe the processes related to investor services provided by R & T agents for:

Recording changes of address, bank & POA

Processing dividend / Interest payments

Transfer of ownership of Securities

Issuance of Duplicate Certificates

Lost securities and Stop Transfer instructions

Transmissions and deletions

Handling shareholder inquiries and complaints

Unit 10: Stock exchanges – Role, Listing

10.1 Identify the role of the secondary market in securities and contrast it with the role of the primary market.

10.2 Identify the role of the stock exchanges as facilities for conducting secondary market transactions and contrast with the conduct of primary market transactions.

10.3 Identify that all secondary market contracts take place between or through exchange members.

10.4 Identify the principal features of a stock exchange and identify the major stock exchanges in India.

10.5 Identify and describe the role of various participants in the stock markets

10.6 Identify the advantages to a company of listing its shares on an exchange in terms of advantages to a company of listing on an exchange.

10.7 List and describe exchange listing requirements, salient features of the listing agreement, including periodic reporting etc.

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