Market Participants in the Securities Market

What role do investors play in the securities market?

They regulate the market and enforce fair practices.
They act as intermediaries between issuers and regulators.
They provide surplus funds to companies in return for financial gains.
They oversee the conduct of intermediaries in the market.

Which of the following is NOT a category of investors in the securities market based on primary public issuance categorization?

Retail Individual Investors
Institutional Investors
Non-Institutional Investors (NII)
Foreign Portfolio Investors (FPI)

What is the primary characteristic of Retail Individual Investors in the securities market?

They are individual investors with investments over two lakhs rupees.
They are individual investors with investments up to two lakhs rupees.
They are institutional investors.
They are foreign investors.

Which category of investors includes entities like central banks, sovereign wealth funds, and international organizations?

Retail Individual Investors
Institutional Investors
Non-Institutional Investors
Foreign Portfolio Investors (FPIs)

What regulatory body in India specifies the categories of Foreign Portfolio Investors (FPIs)?

Reserve Bank of India (RBI)
Securities and Exchange Board of India (SEBI)
Ministry of Finance
National Stock Exchange (NSE)

What is the primary role of issuers in the securities market?

Regulating the stock exchanges
Facilitating trading between buyers and sellers
Tapping the market to finance their capital expansion and growth plans
Clearing and settlement of securities transactions

What is the primary role of securities market intermediaries in the securities market?

Issuing financial securities to investors
Facilitating trading between buyers and sellers
Regulating the conduct of issuers and investors
Providing financial guarantees for transactions

What is the role of Clearing Corporation in the securities market?

Issuing financial securities to investors
Providing financial guarantees for all transactions
Regulating the conduct of issuers and investors
Facilitating trading between buyers and sellers

What is the function of Stock Exchanges in the securities market?

Issuing financial securities to investors
Clearing and settlement of securities transactions
Regulating the conduct of issuers and investors
Providing a trading platform for buyers and sellers

What is the primary objective of a depository in the securities market?

To issue financial securities
To provide trading platforms
To facilitate paper-based trading
To facilitate paper-less trading and maintain ownership records

Who provides custodial facilities, dematerialization, and various transactional services in the securities market?

Stock Exchanges
Clearing members
Depositories
Regulators

What is the role of a trading member or stock broker in the securities market?

Providing custodial services
Facilitating paper-based trading
Executing trades on behalf of clients and on their own account
Issuing financial securities

Who can become a Depository Participant (DP) according to SEBI regulations?

Only individuals
Only banks and financial institutions
Banks, financial institutions, NBFCs, clearing corporations, and more
Only SEBI registered trading members

What is the key difference between a Professional Clearing Member (PCM) and a Trading cum Clearing Member (TCM)?

PCMs have both trading and clearing rights, while TCMs only have clearing rights.
PCMs can clear trades for all members, while TCMs can only clear their own trades.
PCMs can trade on behalf of clients, while TCMs can only trade on their own account.
There is no difference; both PCMs and TCMs have the same rights.

What is the primary responsibility of Custodians in the securities market?

Executing trades on behalf of clients
Providing custodial services and clearing trades
Trading securities on behalf of trading members
Clearing and settlement of trades

What distinguishes Self-Clearing Members (SCMs) from Trading cum Clearing Members (TCMs)?

SCMs can clear trades for all members, while TCMs can only clear their own trades.
SCMs can trade on behalf of clients, while TCMs can only trade on their own account.
SCMs can clear their own trades but cannot clear trades for other members.
There is no difference; SCMs and TCMs have the same rights.

What is the minimum age requirement for an individual to be eligible for trading membership in a recognized stock exchange?

18 years
21 years
25 years
30 years

What type of partnership firm is eligible for trading membership, and how many designated partners are required?

Any partnership firm
Registered partnership firm under the Indian Partnership Act, 1932
Limited Liability Partnership
No designated partners required

What is the minimum educational qualification required for designated partners in a partnership firm seeking trading membership?

Graduate degree
HSC or equivalent qualification
Postgraduate degree
PhD

Which entity is eligible for trading membership if it complies with specified financial requirements and SEBI norms?

Limited Liability Partnership
Registered partnership firm
Sole proprietorship
Corporation

What is the main objective of the Securities and Exchange Board of India (SEBI)?

Promoting fraud and unfair trade practices
Regulating only the primary market
Protecting the interests of investors in securities
Restricting the development of the securities market

Which act defines money laundering and provides for its prevention, including confiscation of proceeds of crime?

SEBI Act, 1992
Securities Contracts (Regulation) Act, 1956
Depositories Act, 1996
Prevention of Money Laundering Act, 2002

What is the primary role of a custodian in the securities market?

Executing buy and sell orders for clients
Safeguarding securities and tracking corporate actions
Regulating stock exchanges
Managing mutual funds

Which regulatory authority is responsible for monitoring the banking sector in India?

SEBI
RBI (Reserve Bank of India)
IRDAI (Insurance Regulatory and Development Authority of India)
PFRDA (Pension Fund Regulatory and Development Authority)

What is the main purpose of the Securities Contracts (Regulation) Rules, 1957?

To define money laundering and its prevention
To regulate stock brokers
To specify qualifications for membership on a recognized stock exchange
To oversee mutual funds

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