NISM NISM-Series-VII Questions: Improve Your Exam Preparation [2026]

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NISM NISM-Series-VII Exam Syllabus Topics:

Section	Objectives
Risk Management in Securities Markets	- Risk mitigation systems 1. Surveillance and compliance mechanisms 2. Margins and collateral systems - Market and operational risk 1. Operational risk controls 2. Types of financial risks
Securities Market Operations	- Trading process 1. Trade confirmation and reporting 2. Order execution and trade lifecycle - Market participants and structure 1. Roles of brokers, exchanges, and investors 2. Order types and trading mechanism basics
Clearing and Settlement	- Settlement systems 1. Margining and risk adjustments 2. T+1/T+2 settlement cycles - Clearing mechanisms 1. Clearing corporations and counterparties 2. Netting and settlement obligations
Depository Operations	- Corporate actions 1. Dividends, bonuses, splits 2. Record dates and entitlement processing - Demat account framework 1. Account opening and maintenance 2. NSDL and CDSL roles

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NISM Series VII - Securities Operations and Risk Management Certification Sample Questions (Q114-Q119):

NEW QUESTION # 114
According to the eligibility criteria for 'Accredited Investors' in the Indian securities market, which of the following financial profiles satisfies the requirements for an Individual or HUF to obtain accreditation?

A. Annual Income 2 INR 1 Crore AND Net Worth 2 INR 3 Crore
B. Net Worth 2 INR 7.5 Crore, out of which at least INR 3.75 Crore is in the form of financial assets
C. Net Worth 2 INR 5 Crore, with no specific requirement for financial assets
D. Annual Income INR 2 Crore, irrespective of Net Worth composition
E. Annual Income 2 INR 50 Lakhs AND Net Worth INR 5 Crore

Answer: B

Explanation:
As per the eligibility criteria for Accredited Investors, an Individual, HIJF, Family Trust, or sole proprietorship must meet one of the following: (i) Annual Income >= INR 2 Crore; OR (ii) Net Worth >= INR 7.5 Crore, out of which at least INR 3.75 Crore is in the form of financial assets; OR (iii) Annual Income >= INR 1 Crore + Net Worth >= INR 5 Crore, out of which at least INR 2.5 Crore is in the form of financial assets.

NEW QUESTION # 115
When handling 'Trade Allocation' for institutional clients in the back office, how is a single order placed with the Custodial Participant code 'INST' processed?

A. The back office receives deal sheets from the front office and distributes the single trade across various sub-schemes of the client, generating appropriate contract notes.
B. The trade is automatically allocated pro-rata to all active clients of the broker to ensure fair distribution.
C. The back office aggregates multiple 'INST' orders into a single block trade for reporting to the Exchange.
D. The trade is kept in a suspense account until the Custodian confirms the trade on T+2 day.
E. The 'INST' code is replaced with the broker's proprietary account code, and the trade is settled as a proprietary trade.

Answer: A

Explanation:
In the case of institutional trades, the front office enters a single order with CP code 'INST'. Subsequently, based on deal sheets received from the front office, the back office user allocates the trade to individual schemes within the parent fund and generates the appropriate contract note. The broker also uploads these allocation details to the clearing corporation.

NEW QUESTION # 116
Which of the following statements accurately reflect the roles and functions of a Clearing Corporation as a central counterparty (COP)?
(Select all that apply)

A. It reduces the number of payments due by netting transactions.
B. It executes client orders on the stock exchange platform on behalf of the trading members.
C. It calculates and controls the margining mechanism.
D. It provides independent legal enforcement of contracts, reducing the need for buyers and sellers to take legal action against one another.
E. It guarantees settlement of trades through the process of novation.

Answer: A,C,D,E

Explanation:
The Clearing Corporation guarantees settlement (novation), reduces payments via netting, provides dispute resolution/legal enforcement (buyers/sellers don't sue each other), and calculates/controls margining. Option D is incorrect because the Clearing Corporation does not execute orders; execution is the function of the Stock Exchange/Trading Members.

NEW QUESTION # 117
In the context of the settlement mechanism for institutional transactions, if a Custodian rejects a trade allocated to them by a broker, how is the settlement of such a rejected trade processed?

A. The trade is annulled by the Stock Exchange immediately.
B. The trade is settled through the Delivery Versus Payment (DVP) basis.
C. The settlement is deferred to T+2 to allow for re-confirmation.
D. The Clearing Corporation settles the trade using the Core Settlement Guarantee Fund.
E. The trade is transferred to the broker's error account for liquidation.

Answer: B

Explanation:
In the event of rejection of institutional trades by the custodian, the trade will be settled through Delivery Versus Payment (DVP) basis. Such trades will also be subjected to penalties as may be imposed by Stock Exchanges/Clearing Corporations.

NEW QUESTION # 118
For the purpose of corporate action adjustments in the Equity F&O segment, under what specific condition is a dividend deemed to be 'extra-ordinary', thereby necessitating an adjustment to the futures and options contracts?

A. If the dividend declared is more than 5% of the paid-up capital of the company.
B. If the dividend yield exceeds the risk-free interest rate (MIBOR) prevailing on the declaration date.
C. If the dividend amount exceeds 10% of the closing price of the scrip on the record date.
D. If the dividend is declared as an 'interim' dividend rather than a 'final' dividend.
E. If the dividend amount is at and above 2% of the market value of the underlying security.

Answer: E

Explanation:
According to the methodology for adjustment in Equity F&O, for extra-ordinary dividends i.e., at and above 2 percent of the market value of the underlying security, there would be an adjustment in Equity F&O. Dividends below this threshold are deemed ordinary and no adjustment is made.

NEW QUESTION # 119
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