NISM1 : Lesson 10

A broker who creates false market and prices in concert with others has adhered to SEBI code of conduct for brokers. True or False?

A broker should abide by all the provisions of the Act and the rules, regulations issued by the Government, SEBI and the stock exchanges from time to time as may be applicable to him. True or False?

Choose the correct option regarding broker’s duties

1.  A broker should not encourage sales or purchases of securities with the sole object of generating brokerage or commission.
2. A broker should not furnish false or misleading quotations or give any other false or misleading advice or information to the clients with a view of inducing him to do  business and enabling himself to earn brokerage or commission thereby.

Rajesh Kumar, a trader, has not fully paid his dues to his broker Sharewala Ltd. Rajesh Kumar opened another trading account with another broker, Damodar Shah. Mr. Damodar knows that Rajesh Kumar has not paid his dues at Sharewala Ltd. He allows Rajesh to trade in equities. Mr. Damodar Shah is adhering to Broker code of conduct. True or False?

A broker should not issue a contract note transactions to client of sub‐broker.

Choose the correct option regarding advice to client in public domain:

1. A broker or any of his employees should make an investment advice about a security in publicly accessible media, only if a disclosure of his interest including the long or short position in the said security has been made, while rendering such advice.
2. In case, an employee is rendering such advice, he should also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice.

A sub‐broker should enter into a tripartite agreement with his ______________ specifying the scope of rights and obligations of the broker, sub‐broker and client of the sub‐broker.

Choose the correct option regarding the sub brokers:

1. A sub‐broker should extend fullest cooperation to his broker in protecting the interests of their clients.
2. A sub‐broker should not fail to carry out his broking transactions with his broker, fail to meet his business liabilities or show negligence in completing the settlement of transactions with them.
3. A sub‐broker should advertise his business publicly without waiting for the permission of exchange.

Choose the correct option regarding sub brokers and regulatory authorities:

1.  A sub-broker should comply with the rules, byelaws and regulations of the stock exchange.
2.  The code of conduct permits a sub‐broker in carrying out transactions which distort the market equilibrium, while he makes personal gains.
3.  A sub‐broker should not refuse to submit to SEBI or the exchange any documents or papers as may be required.

No Trading Member or person associated with the Trading Member shall guarantee a client against a loss in any transactions effected by the Trading Member for such client. True or False?

Choose the correct option. Trading Member shall ensure that its employees are:

1. Adequately trained in operations in the relevant market segment in which they deal.
2. Are aware of relevant statutory acts governing the Trading Member.
3. Are aware of the Rules, Regulations and Bye‐laws of the Currency Derivatives Segments of the Exchanges, including any additions or amendments thereof.

Who will be responsible for trades originating through either the trading member id or the User Id (of a trading member)?

In case of an alleged fraud or misrepresentation by the Authorised person of Trading Member, if the Trading Member satisfies the Currency derivatives segment of the exchanges that such fraud or misrepresentation took by a person other than his authorized person and that the action and/or trades did not originate from any of his approved workstations, the exchange may:

A Trading Member or person associated with a Trading Member shall not make improper use of constituent’s securities/positions in derivatives contracts or funds. True or False?

A Trading Member can exercise his discretionary power in a constituent’s account even if such constituent has not given prior written authorization. True or False?

Trading Member shall disclose the name and beneficial identity of a constituent to the Currency Derivatives Segment of the Exchanges as and when required by it. True or False?

The facility of placing orders on ‘Pro‐account’ through trading terminals can be availed by the Trading Members at multiple location of the Trading Members as specified / required by the Trading Members. True or False?

No Trading Member shall shield or assist or omit to report any other Trading Member whom he has known to have committed a breach or evasion of any Rules or bylaws to exchanges. True or False?

A Trading Member does not require the permission of currency derivative segment of the exchange to transact in derivatives contracts which have been suspended from official quotation. True or False?

Choose the correct option. A Trading Member shall not :

1. Make bids for derivatives contracts with an intention of creating a false or misleading appearance with respect to the market, or the price of any derivatives contracts,
2. Knowingly make a transaction or give an order for the purchase or sale of derivatives contracts, the execution of which would involve no change of beneficial ownership.

If an investor who has made a complaint against a trading member, and is not satisfied even after meetings organized by the exchange at its premises, can straight away go to the court of law. True or False?

Which of the following complaint will the exchange take up?

Choose the correct option regarding complaints that exchange would/ wouldn’t take up:

1. Exchange would take up complaint regarding Claims for notional loss, opportunity loss for the disputed period or trade,
2. Exchange wouldn’t take up complaints pertaining to trades not executed on the Exchange by the complainant,
3. Exchange wouldn’t take up complaints of Claims of sub‐broker/ authorized persons for private commercial dealings with the trading member

An investor can check the status of his grievance redressal through a web enabled system launched by SEBI called as:

In the SCORES system, every complaint has an online audit trail (From initiation to final disposal). True or False?