NISM Series XIX-B : Alternative Investment Funds (Category III) Distributors Certification Examination

NISM Series XIX-B Mock Test

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AIF Distributors 19B
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It's Series 19B. 'XIX' is Roman Numeral for 19.

Official name is NISM Series XIX-B: Alternative Investment Funds (Category III) Distributors Examination. However, candidates refer to it as nism 19B, nism XIX B, AIF Distributor(cat 3) exam, AIF exam, nism AIF-19B exam etc.

The NISM Series XIX‑B (also known as 19B) is a certification exam offered by NISM under the aegis of SEBI, designed for Distributors and Placement Agents dealing with Alternative Investment Funds (AIFs) specifically in Category III.

An AIF Distributor is a financial intermediary who markets and sells units of AIFs to prospective investors like HNIs, institutions, and family offices, typically for a fee or commission.

  • Distributors and placement agents of Category III AIFs.
  • Wealth managers and private bankers dealing with HNIs.
  • Employees of banks, NBFCs, and financial intermediaries involved in AIF distribution.
  • Independent Financial Advisors (IFAs).
  • Sales and business development teams of AIF fund houses.

Assessment Structure

Total Marks 100
Total Questions Multiple Choice [80 x 1 = 80]
Case-based [5 cases x 4 questions x 1 mark = 20]
Total Duration 2 Hours
Passing Score 60%
Negative Marking 10% (0.10 mark)

Syllabus & Weightage

Unit No. Unit Name Weightage
Unit 1 Overview of Alternative Investments 4%
Unit 2 Growth of Alternative Investment Funds in India and Suitability of Category III AIFs 4%
Unit 3 Introduction to Category III AIF Ecosystem 12%
Unit 4 Category III AIF: Fund Structures and Service Providers 12%
Unit 5 Regulatory Framework 15%
Unit 6 Fees Structure, Fund Performance and Benchmarking 15%
Unit 7 Category III AIF Investment Strategies and Due Diligence Process 8%
Unit 8 Valuation 12%
Unit 9 Taxation 10%
Unit 10 Good Practice 8%

Detailed Syllabus

Unit 1: Overview of Alternate Investments
  • *Distinguish between Traditional vs Alternate investments
  • *Types: PE, VC, Hedge Funds, Real Estate, Commodities etc.
  • *Global evolution and growth
  • *Role in portfolio, benefits and limitations
Unit 2: Growth of AIF in India & Suitability of Cat III
  • *Evolution and growth in India
  • *Fund categories under SEBI Regulations 2012
  • *Suitability for investors (Risk-return, HNI/Institutional)
  • *Market size and registered AIFs
Unit 3: Introduction to Cat III AIF Ecosystem
  • *Investments and Characteristics
  • *Ecosystem: Investors, Sponsors, Trustees, Investment Managers
  • *Capital Committed, Drawdown, Due Diligence, ESG
  • *Fees: Management, Incentive, Returns, Waterfalls
  • *Asset classes vs Mutual Funds/PMS
  • *Portfolio Diversification and Risk Management (Alpha/Beta)
Unit 4: Cat III AIF: Fund Structures and Service Providers
  • *Fund Structures: On/Off-shore, Unified, Master-Feeder
  • *Service Providers: Admins, Distributors, Custodians, Auditors etc.
Unit 5: Regulatory Framework
  • *SEBI (AIF) Regulations 2012: Registration, Eligibility, Disclosure
  • *Investment conditions, Legal structures, PPM
  • *Periodic disclosures, Leverage, Risk Management
  • *Open vs Closed-ended, Listing, Fund Raising, Concentration limits
  • *Investor Charter, Winding up
  • *Other Regs: FATCA, CRS, CTR, Insider Trading, PMLA, FEMA
Unit 6: Fee Structure, Fund Performance and Benchmarking
  • *Management Fees, Incentive Fees, Total Fee
  • *Hurdle Rate, High Water Mark
  • *Post-fee returns, Total Expense comparison
  • *Return Metrics: IRR (Gross/Net), TVPI, DPI, RVPI
  • *Risk Metrics: Market/Liquidity risk, Kurtosis, Skewness, SD
  • *Risk-Return: Sharpe, Treynor, Drawdown, VaR
  • *Performance Benchmarking and Alpha evaluation
Unit 7: Cat III AIF Investment Strategies & Due Diligence
  • *Equity Strategies: Long-only, Long/Short, Market-Neutral
  • *Global-Macro, Convertible Arbitrage
  • *Event-driven: Activist, Merger Arbitrage, Pre-IPO
  • *Due Diligence process
Unit 8: Valuation
  • *NAV concept, Mark-to-Market (MTM)
  • *Valuation of liquid/illiquid securities, Derivatives
  • *Money-market instruments valuation
  • *Role of third-party registered valuers
Unit 9: Taxation
  • *Tax-regime Diff (Cat I/II vs III)
  • *Determinate vs Indeterminate trust, Revocable vs Irrevocable
  • *Tax rates: Business income, Capital gains, Dividends
  • *GST regime, Withholding tax
  • *IFSC tax regime
Unit 10: Good Practice
  • *Fund Pitch book, Client communication, Post-investment support
  • *Confidentiality, Code of Conduct, Conflict of interest
  • *Importance of Insurance