NISM Series III-A (Compliance) cheat sheet
NISM Series III-A (Compliance) · Keep the key ideas within reach.
Securities Intermediaries Compliance (Non-Fund)
SEBI (Intermediaries) Regulations, 2008 govern registration, general obligations, and code of conduct for stock brokers, merchant bankers, underwriters, portfolio managers, depository participants, and investment advisers; registration is granted per activity and is not transferable without SEBI approval.
Two-tier registration: applicants meeting net-worth and infrastructure criteria register directly with SEBI; sub-brokers and certain lower-tier intermediaries register with the recognised stock exchange, which then reports to SEBI.
Registration certificate is valid until suspended or cancelled; intermediaries must pay the prescribed registration fee and annual fee within the timelines fixed by SEBI, and non-payment can lead to cancellation after notice.
Net-worth thresholds are activity-specific (e.g., stock broker, merchant banker, portfolio manager, depository participant differ); net worth must be maintained at all times and certified periodically by a chartered accountant.
Code of conduct duties: act with integrity and in the client's best interest, maintain confidentiality, avoid conflicts of interest, keep records for the prescribed period (generally 5 years), and refrain from unfair trade practices or market manipulation.
SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 prohibit manipulative, deceptive, and unfair trade practices; intermediaries must have internal controls to detect and report such conduct.
KYC and AML obligations flow from the PMLA, 2002 and SEBI KYC norms: client due diligence, risk categorisation, beneficial-ownership identification, record-keeping, and reporting suspicious transactions to FIU-IND.
Grievance redressal: every intermediary must designate a compliance officer, maintain a complaints register, resolve complaints within prescribed timelines, and participate in SEBI's SCORES platform; unresolved complaints escalate to arbitration or SEBI.
Inspection and enforcement: SEBI may inspect books, records, and systems; penalties include warning, suspension, cancellation of registration, and monetary penalties under the SEBI Act, 1992, with appeal to the Securities Appellate Tribunal (SAT).