Settlement Process

In the Indian equities market, what does the term “T+2 settlement cycle” refer to?

Trades must be settled two days after they are executed.
Trades must be settled on the same day they are executed.
Trades must be settled on the next business day.
Trades must be settled within one working day.

How are holidays and weekends typically considered in the calculation of the settlement cycle?

They are included in the settlement cycle.
They extend the settlement cycle.
They are excluded from the settlement cycle.
They only affect cash settlement.

What is the key difference between cash-settled and physically settled derivatives contracts?

Cash-settled contracts require the physical delivery of the underlying asset
Physically settled contracts settle through exchange of price differentials.
Both types involve the exchange of the physical underlying asset.
Cash-settled contracts settle on the same day as the trade.

What is the purpose of netting obligations in the clearing process?

To increase the complexity of open positions
To calculate transaction fees
To reduce the number of securities traded
To simplify the determination of obligations

How is the final exercise settlement for cash-settled option contracts typically conducted?

By physically delivering the underlying asset
By random assignment of long and short positions
By exchanging price differentials
By offsetting buy and sell quantities

What is the main difference between “Netted obligation” and “Trade to trade or Gross obligations” methods of determining obligations?

Netted obligation considers cumulative buy and sell quantities.
Trade to trade method involves marking to market.
Gross obligations involve physical delivery.
Netted obligation does not involve funds.

What is the primary purpose of maintaining a separate and distinct primary clearing account by clearing members?

To facilitate trading activities
To store physical securities
To maintain a record of client accounts
To settle funds obligations with the clearing corporation

How are payments received/made between brokers and clients typically conducted?

In cash
Through account payee crossed cheques/demand drafts or direct bank transfers
Through physical delivery of securities
Through cryptocurrency transactions

When must the settlement of funds and securities be completed if not otherwise agreed upon by a client?

Within 24 hours of the pay-out
Within 3 working days
Within 5 working days
Within 1 working day

What is the purpose of an auction in the context of securities settlement?

To sell securities to the highest bidder
To buy securities from the lowest bidder
To address shortages in securities delivery
To set the official closing price for a stock

What is the basis for determining adjustments for corporate actions in the equity F&O segment?

Maximizing the profit of market participants
Ensuring that all participants benefit equally from the corporate action
Maintaining the value of positions on the cum and ex-dates for the corporate action
Favoring in-the-money positions over out-of-money positions

In the context of securities shortages, what is the term for shortages that occur within the same trading member’s transactions?

Internal shortages
Auction shortages
External shortages
Margin shortages

When are adjustments for corporate actions typically carried out in the equity F&O segment?

On the ex-dividend date
After the close of trading hours on the same day
On the last day of trading on a cum basis
On the record date

What are the three main elements that may be adjusted during corporate actions in the equity F&O segment?

Option premium, trading hours, and tick size
Strike price, market lot/multiplier, and position
Margin requirements, dividend payouts, and trading days
Contract expiry date, lot size, and market orders

How is the adjustment factor calculated for bonus issues and stock splits?

(A+B)/B for bonus, A/B for stock splits
(A/B) for bonus, (A+B)/B for stock splits
(A-B)/A for bonus, (A/B) for stock splits
(A+B)/A for bonus, (A/B) for stock splits

In the case of dividends, what determines whether the dividend is “extra-ordinary” and subject to adjustment in Equity F&O?

The closing price of the stock on the day the dividend is announced
The dividend amount declared by the company
The dividend's impact on the market value of the underlying stock (at or above 5 percent)
The company's decision to seek exemption from SEBI regulations

What happens to unexpired contracts outstanding on the last cum-date in the case of mergers or demergers?

They are extended indefinitely until the merger is completed
They are carried forward and compulsorily settled at the settlement price
They are automatically closed out by the exchange
They continue trading as usual without any adjustments

Under what conditions can derivative contracts on a company be re-introduced from the first day of listing of the post-restructured company’s stock in the underlying market?

If the original company had a market capitalization of at least Rs. 1000 crores prior to restructuring.
If the post-restructured company is expected to be one-third the size of the pre-restructuring company in terms of revenues, assets, or analyst valuations
If the derivative contracts on the original company were not traded on any Exchange prior to restructuring.
All of the above

What course of action is taken with existing derivative contracts on the pre-restructured company when re-introducing contracts on the post-restructured company?

Existing contracts continue trading alongside new contracts.
All existing contracts of the security shall be expired on the last cum date.
Existing contracts are transferred to the post-restructured company.
Existing contracts are automatically closed out by the exchange.

Under what circumstances might the relevant authority carry out adjustments for other corporate actions, including compulsory closing out?

When the pre-restructured company's market capitalization is above Rs. 1000 crores.
When the post-restructured company's revenues exceed one-third of the pre-restructuring company's revenues
On a case-by-case basis, when it deems necessary and in conformity with established guidelines.
When the post-restructured company's free float is extremely low.

What is the basis for calculating the closing price of futures contracts on an index on the trading day?

The highest traded price of the futures contract.
The lowest traded price of the futures contract.
The last half-hour weighted average price of the futures contract on the given exchange.
The opening price of the futures contract.

How is the closing price of futures contracts on individual securities calculated on the trading date?

Based on the opening price of the futures contract.
By taking the highest traded price of the futures contract.
Using the lowest traded price of the futures contract.
Calculated based on the last half-hour weighted average price across exchanges of such contract.

What is the basis for calculating the closing price of currency futures contracts for the trading day?

The highest traded price of the currency futures contract.
The lowest traded price of the currency futures contract.
The opening price of the currency futures contract.
The last half-hour weighted average price across exchanges of such contract.

How is the final settlement price determined for futures contracts on individual securities?

Based on the opening price of the underlying security.
Calculated as the closing price of the relevant underlying security in the Capital Market Segment across exchanges on the last trading day of the futures contract.
Determined by the highest traded price of the futures contract.
Derived from the lowest traded price of the futures contract.