NISM Series 7 - Securities Operations & Risk Management (NISM VII / SORM) Exam

What are the different names of SORM Exam ?

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What is NISM SORM (Series 7) Exam

SORM full form is Securities Operations & Risk Management. This NISM Series 7 exam is a compulsory exam for employees of registered stock-broker / trading member / clearing member in recognized stock exchanges, involved in

  1. Assets or funds of investor or clients
  2. Redressal of investor grievances,
  3. Internal control or risk management
  4. Activities having a bearing on operational risk.

Who can write / should write this SORM exam?

  1. Approved users (Dealers) of the trading member of a Registered Stock Broker or Trading Member or Clearing Member of a recognized stock exchange.
  2. Employees of Stock Brokers and Sub-Brokers in Capital Market Segment
  3. Students of all discipline but would be most useful to MBA Finance, B.Com, M.Com, Lecturers, and Professors etc.
  4. Anybody having interest in the Capital Market Segment

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NISM Series 7 Securities Operations & Risk Management Exam Mock Tests

NISM Series 7 SORM Exam Mock Tests

NISM Series 7 Mock Test

Where can I get NISM 7 SORM Study Material ?

Click here for NISM 7 SORM Short Notes

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Where can I get NISM Securities Operations Exam Dates ?

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What topics are covered in NISM SORM syllabus ?

Syllabus Outline for NISM SORM Exam

NISM 7 SORM Syllabus Weightages (Syllabus wise question %)
1: Introduction to Securities Markets 5%
2: Market Participants in the Securities Markets 10%
3: Introduction to Securities Broking Operations 20%
4: Risk Management 15%
5: Clearing Process 15%
6: Settlement Process 15%
7: Investor Grievances and Arbitration 10%
8: Other Services Provided by Brokers 10%

Assessment Structure: Exam Pattern for NISM SORM

DURATION 120 Minutes
NO. OF QUESTIONS 100
MAXIMUM MARKS 100
PASS MARK 50
NEGATIVE MARK 25% FOR WRONG ANSWERS
CERTIFICATE VALIDITY 3 YEARS
EXAM FEES Rs 1500/-

Syllabus - NISM 7 Securities Operations and Risk Management

Unit 1: Introduction to the Securities Market

  • Explain the Indian Securities Markets, highlighting its role in the Indian economy.
  • Explain the primary and the secondary market, the different avenues for raising money from the public in the primary market, and the two mediums in the secondary market — the OTC and the Exchange traded market.
  • Define Money Market and the key features of the money market products.
  • Define the Equity market and its products such as equity shares, debentures, warrants, etc.
  • Define the Derivative market and its products such as Index/Stock Futures.
  • Explain Currency derivatives.
  • Define the Debt market and its products such as the Government Securities Market and the Corporate Debt Market.

Unit 2: Market Participants in the Securities Market

  • Know the different market participants in the Indian Securities Market.
  • List the different types of Investors based on their investment objectives — retail investors, high net worth individuals, and Institutional Investors.
  • Briefly introduce the Issuers who raise money from the securities market.
  • Explain how money can be raised from international capital markets by way of GDRs, ADRs, FCCBs, and ECBs.
  • Explain about the Intermediaries in the Indian Securities Market — define stock exchanges, their role in the market, discuss the Clearing Corporation/Agency and the role performed by them, define and discuss trading members, depositories, depository participants, and Custodians.
  • Explain the regulatory framework for the securities market in India and the role of Securities and Exchange Board of India (SEBI).

Unit 3: Introduction to the Securities Broking Operations

  • Explain the Trade Life Cycle and the steps and participants involved in a trade life cycle.
    • Explain how affirmation and confirmation for institutional clients are done.
    • Explain how custodial transactions are executed.
    • Define and explain Clearing and Settlement of executed trades.
  • Understand the various Front Office Operations:
    • Client On-Boarding and Registration.
    • Role of sales in front office.
    • Process of opening a trading account and required documents.
    • Importance of KYC and definition of Unique Client Code.
  • Discuss the Rights and Obligations (Member-Client Agreement).
  • Know about the Risk Disclosure Document.
  • Explain Order Management:
    • Types of orders and placing methods (internet/phone).
    • Order routing through the Exchange.
  • Explain trade execution, order placement, and trade matching.
  • Explain the various activities in a Middle Office in a securities broking firm including Risk Management and Surveillance mechanisms.
  • List the various activities in Back Office Operations:
    • Trade Enrichment and Allocation.
    • Trade Confirmation/Modification.
    • Clearing and Settlement Process.
    • Accounting and broker account maintenance.
  • Explain the role of Information Technology in a broking firm.
  • Understand the different Regulatory Compliances a broker must follow.

Unit 4: Risk Management

  • Discuss Risk Management in Cash Segment:
    • Understanding Margin, Value at Risk, Mark to Market & Extreme Loss.
    • Know about Liquid Assets, Liquidity Categorisation, and Mean Impact Cost.
    • Learn about Margining of Institutional Trades, Base Minimum Capital, Additional Margins, and Pre-trade Risk Controls.
  • Discuss Risk Management Framework for F&O Segment:
    • Types of Margins — Initial, Exposure, Premium, and Assignment Margins.
    • Reporting, Disclosure, and Exposure Limits.
  • Discuss Compliances and Regulatory Reporting:
    • Summarize regulatory compliance requirements.
    • Explain penalties for non-compliance and documentation lapses.
    • List mandatory books and periodic reporting timelines.
    • Explain client account statement practices and Risk-Based Supervision.
  • Know about the Core Settlement Guarantee Fund — Corpus, Contribution, Default Waterfall, Stress Testing, and Back Testing.

Unit 5: Clearing Process

  • Explain step-by-step the Clearing Process.
  • Explain the Role of a Clearing Agency in the clearing process of a trade.
  • Define Clearing Banks and explain their functions.
  • Define and Explain Clearing Members/Custodians.
  • Explain the role of Depository and Depository Participants.
  • Differentiate the clearing process between equities and derivatives trading.
  • Understand Determination of Obligation of Clients, Client Netting, and Broker Netting within the Exchange.

Unit 6: Settlement Process

  • Understand the Settlement Cycle.
  • Understand settlement procedures for Internet-based and telephonic trading.
  • Understand Settlement of Funds:
    • Obligations to clients and custodians.
    • Margin Payments and Settlement Dues.
  • Understand Settlement of Securities through depository clearing systems.
  • Understand Corporate Actions and their Adjustments.
  • Explain Auction of Securities — when and how auctions are carried out on BSE/NSE.

Unit 7: Investor Grievances and Arbitration

  • Explain the importance of investors and grievance redressal mechanisms.
  • Discuss the procedure followed to redress investor grievances.
  • Learn about IPF / Customer Protection Fund (CPF) at Stock Exchanges.
  • Understand arbitration and appellate arbitration procedures in exchanges.

Unit 8: Other Services Provided by Brokers

  • Explain the various other services which a broker offers to investors.
  • Understand IPO applications:
    • Treatment of IPO applications by brokers.
    • Procedure for collection of IPO forms.
    • ASBA facility.
  • Explain how mutual fund units are traded on the exchange.
  • Explain Portfolio Management Services offered by brokers.
  • Explain the role of Research in a broking firm.
  • Explain Depository Services provided by brokers.
  • Explain the concept and importance of Margin Trading.