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Test Objectives

NISM-Series-IIIA Securities Intermediaries Compliance (Non-Fund) Certification Examination

Part A – Understanding the Financial and Regulatory Structure in India

Unit 1: Introduction to the Financial System

1.1 Understand the Financial System

1.1.1 Describe the Financial System.

1.2 Know about the Financial Market Intermediaries

1.3 Define and Understand types of Financial Securities

 

Unit 2: Regulatory Framework – General View

2.1 Know the Regulatory System in India

2.2 List the Financial Market Regulators and understand their role

2.2.1 Discuss the role of SEBI in Financial Market Regulation

2.2.2 Describe the role of RBI in Financial Market Regulation.

2.2.3 Discuss the IRDA in Financial Market Regulation.

2.2.4 Describe the PFRDA in Financial Market Regulation

2.3 Discuss the role of other regulators in the financial market

2.3.1 Know the Registrar of companies (ROC)

2.3.2 Know the Economic Offences Wing (EOW)

2.3.3 Know the Financial Intelligence Unit ‐ India (FIU‐I)

2.3.4 Know the Police Authorities

2.4 Understand the role of Appellate Authority

2.4.1 Understand the Role of Appellate Authority ‐Securities Appellate Tribunal (SAT)

2.5 Discuss the Legislative Framework Governing the Financial market

2.5.1 Know the SEBI act 1992

2.5.2 Know the Securities Contracts (Regulation) Act, 1956

2.5.3 Know the Securities Contracts (Regulation) Rules, 1957

2.5.4 Know the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015

2.5.5 Know the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003

2.5.6 Know the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

2.5.7 Know the Companies Act, 1956/2013

2.5.8 Know the Indian Contract Act

2.5.9 Know the Public Debt Act, 1944

2.5.10 Know the Prevention of Money‐Laundering Act, 2002

2.5.11 Know the Foreign Exchange Management Act, 1999

2.5.12 Know the Bye‐Laws of Stock Exchanges

2.5.13 Know the Taxes on Securities

  • Income‐Tax Act, 1961
  • Securities Transaction Tax (STT)
  • Goods and Services Tax

 

Unit 3: Introduction to Compliance

3.1 Understand the need for Compliance

3.1.1 Understand the meaning of Compliance

3.1.2 Understand the meaning of Compliance Officer.

3.1.3 Discuss the importance of appointment of compliance officer.

3.2 Know the Role and Reporting Structure

3.2.1 Understand the scope and role of a compliance officer.

3.2.2 Know the Reporting Structure pertaining to Compliance Officer.

3.2.3 Explain the need for independence for the Compliance Officer to perform his function.

3.2.4 Explain the reporting responsibility of the Compliance Officers.

3.3 Understand the Responsibilities of COs towards Stakeholders:

3.4 Know the Compliance requirements under the SEBI (CAPSM) Regulations, 2007

3.4.1 Know the Obligation of Obtaining Certification

3.4.2 Know the Manner of Obtaining Certification

3.4.3 Know the Validity Period of Certificate

3.4.4 Understand the Continuing Professional Education Requirements

 

Unit 4: SEBI Act, 1992

4.1 Understand the Salient Feature of SEBI Act, 1992

4.1.1 Explain the powers & functions of the SEBI

4.1.2 Understand the Penalties and Adjudication

4.1.3 Explain the Appellate Tribunal

4.1.4 Know the Registration of Intermediaries

4.1.5 Know the Prohibition of Manipulative and Deceptive Devices, Insider Trading etc.

 

Unit 5: Securities Contracts (Regulation) Act, 1956 and Securities Contracts (Regulation) Rules, 1957

5.1 Understand the Securities Contracts (Regulation) Act, 1956

5.1.1 Know the Call for Periodical Returns

5.1.2 Understand the Contracts and Options in Securities

5.1.3 Understand the Penalties and Procedures

5.2 Understand the Securities Contracts (Regulation) Rules, 1957

5.2.1 Understand the Eligibility criteria for membership of a recognized stock exchange

5.2.2 Know the Contracts between members

5.2.3 Know the Audit of accounts of members

5.2.4 Understand the Books of Account

5.3 Understand the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations 2012

5.3.1 Know the Obligation to seek recognition

5.3.2 Know the Consideration of grant of recognition

5.3.3 Know the Networth requirements

 

Unit 6: SEBI (Intermediaries) Regulations, 1992

6.1 Understand the SEBI (Intermediaries) Regulations.

6.2 Know the General Obligations of the Intermediaries.

6.2.1 Know the Appointment of Compliance Officer

6.3 Discuss the inspection and Disciplinary Proceedings

6.3.1 Understand the Obligation of the intermediary on Inspection

6.3.2 Appointment of Auditor

6.4 Understand the action in case of default and manner of suspension or cancellation of certificate.

6.4.1 Know the Action in case of Default

6.4.2 Understand the Procedure for action on receipt of the recommendation

6.4.3 Know about Common Order

6.4.4 know the Surrender of certificate of registration

6.4.5 Know the Effect of debarment, suspension, cancellation or surrender

6.4.6 Know the Directions

6.5 Know the Code of Conduct for intermediaries.

 

Unit 7: SEBI (Prohibition of Insider Trading) Regulations, 2015

7.1 Understand the SEBI (Prohibition of Insider Trading) Regulations, 2015

7.2 Discuss the Code of conduct for prevention of insider trading.

 

Unit 8: SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003

8.1 Understand the Regulation with respect to the prohibition of certain dealings in securities.

8.2 Know the various prohibitions related to manipulative, fraudulent and unfair trade practices.

8.2.1 Understand the Prohibition of Certain Dealings in Securities

8.2.2 Discuss the Prohibition of Manipulative, Fraudulent and Unfair Trade Practices

8.3 Describe the procedure for Investigation.

 

Unit 9: Prevention of Money Laundering Act 2002,

9.1 Understand the Prevention of Money Laundering Act 2002.

9.2 Highlights of PMLA, 2002

9.3 Highlights of SEBI Circular on AML/CFT

9.3.1 Understand the Obligation to establish policies and procedures

9.3.2 Understand the Policies and Procedures for Money Laundering Act 2002

9.3.3 Know Written Anti‐Money Laundering Procedures

9.3.4 Know the Client Due Diligence

9.3.5 Know the Client Identification Procedure (CIP)

9.3.6 Understand the Record Keeping

9.3.7 Understand the Retention of Records

9.3.8 Know the Monitoring of Transactions

9.3.9 Suspicious Transaction Monitoring & Reporting

9.3.10 Reporting to Financial Intelligence Unit‐India

9.4 Understand the concept of Foreign Portfolio Investors Regulations, 2014

9.4.1 Understand the Eligibility Criteria of FPI

9.4.2 Know the Categories of Foreign Portfolio Investor

9.4.3 Understand the procedure for approval to act as designated depository participant

9.4.4 Understand the Eligibility Criteria of designated Depository Participant

9.4.5 Know about the Investment Conditions and Restrictions for FPI’s

9.4.6 Know the Conditions for Issuance of Offshore Derivative Instruments

 

Unit 10: SEBI (KYC Registration Agency) Regulations, 2011

10.1 Introduction to the SEBI (KYC Registration Agency) Regulations, 2011

10.2 Understand the registration process, conditions of initial and permanent registration.

10.3 Understand the Obligations on Surrendering Certificate of Registration.

10.4 Understand the Functions and Obligations of KRA and Intermediary

10.4.1 Understand the Functions and Obligations of KRA

10.4.2 Understand the Functions and Obligations of the Intermediary

10.5 Discuss the Code of Conduct for KRA

10.6 Understand the Guidelines for Intermediaries, KRAs and In‐person Verification

 

Part B – Understanding Intermediary Specific Regulations

 Unit 11: SEBI (Stock Brokers and Sub-brokers) Regulations, 1992

11.1 Discuss the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992,

11.1.1 Know the Registration of Stock Brokers and Sub-Brokers

11.1.2 Registration of trading and clearing member

11.1.3 Understand the General obligations and responsibilities

11.1.4 Understand the Procedure for Inspection

11.1.5 Procedure for action in case of default

  • Monetary Penalty

· Action under SEBI (Intermediaries) Regulations including suspension or cancellation of certificate of registration

  • Prosecution
  • Code of Conduct

11.1.6 Know about Fees payable by Stock Brokers

11.1.7 Understand the Regulation of transactions between clients and brokers

  • Client Agreement
  • Know Your Client (KYC) Form
  • Risk Disclosure Document (RDD)
  • Uniform Documentary Requirements for Trading
  • Execution of Power of Attorney
  • Unique Client Code (UCC)
  • Contract Note
  • Electronic Contract Note
  • Quarterly Statement of Accounts

11.1.8 Direct Market Access - operational specifications, risk management, broker to be liable for DMA trades

  • Operational Specifications
  • Client Authorization
  • Cross Trades
  • Brokers liability

11.1.9 Understand the Margin Requirements

11.2 Discuss the SEBI (Alternative Investment Funds) Regulations, 2012

11.2.1 Know the Registration as Alternative Investment Funds (AIF)

11.2.2 Understand the Eligibility Criteria

11.2.3 Know the Certificate Renewal and Validity

11.2.4 Understand the Investment conditions and Restrictions

11.2.5 Know about the General Obligations of AIF

 

Unit 12: SEBI (Merchant Bankers) Regulations, 1992, Listing Agreement and SEBI (Delisting of Equity Shares) Regulations, 2009, SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011 & SEBI (BuyBack of Securities) Regulations, 2018

12.1 Introduction to the Merchant Bankers

12.2 Discuss the SEBI (Merchant Bankers) Regulations, 1992.

12.2.1 Definition of a Merchant Banker

12.2.2 Know the Registration as a Merchant Banker

12.2.3 Understand the Eligibility Criteria for Grant of Certificate

· Consideration of Application

· Capital Adequacy Requirements

  • Fit and Proper Person

· Furnishing of Information, Clarification and Personal Representation

12.2.4 Understand the process of Registration, Renewal Fees & Validity

12.2.5 Know the Conditions of Registration

12.2.6 Know about Refusal to Grant Certificate

12.2.7 Know about Suspension of Certificate

12.2.8 Understand the general obligations and responsibilities of the merchant banker.

  • Know the code of conduct followed by the merchant banker.
  • Know the Restriction on Business
  • List the financial records which a merchant banker needs to maintain.

12.2.9 Know the Responsibilities of the Merchant Banker

12.2.10 Discuss the Disclosure to SEBI

12.2.11 Understand the Obligations of merchant banker on inspection by SEBI

12.2.12 Know about the Compliance Officer

12.3 Introduction to SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011

12.3.1 Understand the General Obligations of the Merchant Banker

12.4 Discuss briefly the SEBI (Delisting of Equity Shares) Regulations, 2009

12.5 Understand the obligations of the Intermediary under the SEBI (Buyback of Securities) Regulations, 2018

 

Unit 13: SEBI (Issue of Capital Disclosure and Requirements) Regulations, 2009

13.1 Understand the ICDR Regulation from Merchant Banker aspect

13.2 Discuss the Allocation of Responsibilities of merchant bankers as advisors to the issuer company.

13.3 Discuss the Role of merchant bankers as advisors to the issuer company.

13.3.1 Know the Drafting of the Offer Document, abridged prospectus etc.

13.4 Describe the Due Diligence and Compliances

13.4.1 Know the procedure of Documents to be submitted before the opening of the issue

13.4.2 Know the Draft offer document to be made public

13.4.3 Know the Dispatch of Issue Material

13.5 Discuss the Role as an Underwriter

13.5.1 Know the Minimum Subscription

13.6 Understand the General Obligations of Merchant Bankers with respect to Public and Rights Issue

 

Unit 14: SEBI (Depositories) Regulations, 1996

14.1 Understand the SEBI (Depositories) Regulations, 1996.

14.2 Discuss the Rights and Obligations of the Depositories.

14.3 Know the enquiry and inspection procedure followed by SEBI and the penalties.

14.3.1 Penalties

14.4 Discuss the Miscellaneous Issues

14.4.1 Know Composition of Certain Offences

14.4.2 Know Power to Grant Immunity

14.4.3 Know Appeals

 

Unit 15: SEBI (Depositories and Participants) Regulations, 2018

15.1 Understand the procedure of registration of a depository participant.

15.2 Know the rights and obligations of the depository participant.

15.2.1 List the documents related to records of services which need to be maintained.

15.2.2 Describe the investor grievance redressal mechanism.

15.2.3 Know the Investment Advice

15.2.4 Know the procedure of Appointment of Compliance Officer

15.2.5 Know about Inspection

15.3 Know the action in case of any default.

15.4 Know the Code of Conduct for Participants

 

Unit 16: SEBI (Bankers to an Issue) Regulations, 1994

16.1 Describe the procedure of application and registration as a Banker to an Issue.

16.2 Understand the general obligations and responsibilities of Banker to an Issue.

16.2.1 Know the Maintenance of books of account, records and the documents

16.2.2 Know about Furnishing of Information to SEBI

16.2.3 Know the Agreement with body corporate

16.3 Know the Code of conduct for the Bankers to an Issue.

16.4 Highlight the obligations of a banker to an issue in case of inspection by RBI

 

Unit 17: SEBI (Underwriters) Regulations, 1993

17.1 Understand the procedure of registration as an Underwriter.

17.1.1 Know the Capital Adequacy requirements as an Underwriter.

17.2 Highlight the general obligations and responsibilities as an Underwriter.

17.2.1 Know about the agreement with the clients.

17.2.2 List various books of account and records which need to be maintained.

17.3 Understand the Code of Conduct

 

Unit 18: SEBI (Debenture Trustees) Regulations, 1993

18.1 Understand the procedure of application and registration as Debenture Trustees.

18.2 Know the Capital Adequacy requirements as Debenture Trustees.

18.3 Understand the following general obligations and responsibilities.

18.3.1 Know the Obligations before appointment as Debenture Trustees

18.3.2 Know the Debenture Trustee not to act for an associate

18.3.3 Know the Obligation of the Debenture Trustees towards content of the trust deed

18.3.4 Know the Maintenance of books of account, records, documents etc.

18.4 Know the Code of conduct for the Debenture Trustees.

18.5 Understand the process of dissemination of Information by Debenture Trustees.

 

Unit 19: SEBI (Credit Rating Agencies) Regulations, 1999

19.1 Describe the Registration process for Credit Rating Agencies.

19.1.1 Know the eligibility criteria for application

19.1.2 Know about the Certificate Renewal and Validity

19.2 Highlight the General Obligations of Credit Rating Agencies.

19.2.1 Know the Agreement with client

19.2.2 Know about Monitoring of Ratings

19.2.3 Understand the Procedure for review of Rating

19.2.4 Understand the Internal procedures to be framed

19.2.5 Know the Disclosure of Rating Definitions and Rationale

19.2.6 Know the Submission of information to SEBI

19.2.7 Know the Maintenance of Books of Accounts, records, etc.

19.2.8 Know the Steps on auditor’s report

19.2.9 Know about the Confidentiality

19.2.10 Understand the Rating process

19.2.11 Know the Shareholding in a credit rating agency

19.3 Discuss about the Restrictions on Rating issued by Promoters

19.4 Know Code of conduct of the Credit Rating Agencies

19.5 Discuss the Guidelines issued by SEBI for Credit Rating Agencies.

 

Unit 20: SEBI (Custodian of Securities) Regulations, 1996

20.1 Understand the custodian and Custodial Services.

20.2 Describe the eligibility criteria and the registration process.

20.3 Highlight the General Obligations and Responsibilities of Custodians.

20.3.1 Know the Segregation of Activities

20.3.2 Know about Monitoring, Review evaluating and inspecting systems and controls

20.3.3 Discuss Prohibition of assignment

20.3.4 Know the Separate custody account

20.3.5 know the Agreement with the client

20.3.6 Know the Internal controls

20.3.7 Know the Maintenance of records and documents and furnishing of information

20.4 Know the Code of Conduct.

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