NISM Series III-A (Compliance) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

SEBI (Intermediaries) Regulations, 2008

Framework regulation prescribing registration, general obligations, code of conduct, inspection, and enforcement for non-fund securities intermediaries such as brokers, merchant bankers, and portfolio managers.

Registration certificate validity

A certificate of registration granted to an intermediary remains valid until it is suspended or cancelled by SEBI; it is not issued for a fixed term requiring automatic renewal.

Net-worth requirement

Activity-specific minimum capital that an intermediary must maintain at all times; it is certified by a chartered accountant and verified by SEBI during inspection or renewal.

Code of conduct duties

Obligations including integrity, client best interest, confidentiality, conflict avoidance, record-keeping, and abstaining from unfair trade practices; breach invites SEBI enforcement action.

Record retention period

Intermediaries must preserve books, records, and client documentation for the period prescribed under SEBI regulations, generally five years, and produce them on demand during inspection.

PFUTP Regulations, 2003

SEBI regulations prohibiting fraudulent, manipulative, and unfair trade practices in securities markets; intermediaries must maintain controls to detect and prevent such conduct.

KYC and AML obligations

Client due diligence, risk categorisation, beneficial-ownership identification, record-keeping, and suspicious transaction reporting to FIU-IND under PMLA and SEBI KYC norms.

Compliance officer role

Designated officer responsible for monitoring regulatory compliance, maintaining the complaints register, reporting to SEBI, and ensuring internal policies align with applicable regulations.

SCORES platform

SEBI's online complaint redressal system where investors lodge grievances against intermediaries; unresolved complaints may escalate to arbitration or SEBI action.

Securities Appellate Tribunal

Statutory appellate body hearing appeals against SEBI orders, including suspension or cancellation of intermediary registration and monetary penalties under the SEBI Act.

Inspection powers of SEBI

SEBI may examine an intermediary's books, records, and systems, summon persons, and require information to verify compliance with registration conditions and regulations.

Sub-broker registration

Certain lower-tier intermediaries register with a recognised stock exchange rather than directly with SEBI; the exchange reports registration details to SEBI.

Conflict of interest management

Intermediaries must identify, disclose, and manage situations where their own interest or that of an affiliate may prejudice a client's interest or fair market conduct.

Client segregation of funds

Client funds and securities must be kept separate from the intermediary's own assets and used only for the client's purposes, preventing commingling and misuse.

Suspicious transaction reporting

Intermediaries must report suspicious client transactions to FIU-IND under PMLA; failure to report attracts penalties and regulatory action.

Registration fee payment

Intermediaries must pay the prescribed registration fee and periodic fees within SEBI-fixed timelines; persistent non-payment can lead to cancellation after notice.

SEBI Act, 1992 penalties

Statutory basis for monetary penalties, directions, and prosecution for violations; penalties are imposed after inquiry and are appealable to the Securities Appellate Tribunal.

Fit and proper criteria

Applicants and registered intermediaries must satisfy integrity, reputation, and financial soundness standards; adverse findings can disqualify or lead to cancellation of registration.

Change in control notification

Intermediaries must inform SEBI of changes in ownership, control, or management and obtain approval where required before effecting such changes.

Investor grievance escalation

Complaints unresolved through the intermediary's internal process may proceed to stock exchange arbitration or SEBI, depending on the nature of the dispute.

Internal audit and controls

Intermediaries must maintain adequate systems, policies, and periodic internal audits to ensure compliance with regulations and detect irregularities early.

Anti-money laundering policy

Documented procedures covering client acceptance, monitoring, risk categorisation, and reporting, aligned with PMLA and SEBI KYC requirements.

Client onboarding documentation

Collection and verification of identity, address, financial profile, and beneficial ownership before activating an account, forming the basis of KYC compliance.

Prohibition on assured returns

Intermediaries may not promise or guarantee returns to clients unless expressly permitted by the applicable SEBI regulation for that specific activity.

Maintenance of books

Accurate, contemporaneous records of transactions, client instructions, and communications must be kept and made available for regulatory inspection.

SEBI directions and disgorgement

SEBI may issue directions to cease violations and order disgorgement of unlawful gains in addition to penalties, suspension, or cancellation of registration.

Complaint register maintenance

Every intermediary must record investor complaints, track resolution status, and report periodically to SEBI or the relevant stock exchange.

Periodic regulatory reporting

Intermediaries must file prescribed returns and reports with SEBI or exchanges within stipulated timelines; delays or misreporting attract enforcement action.

Client risk categorisation

AML framework classifying clients as low, medium, or high risk based on profile, transaction pattern, and geography, driving the intensity of due diligence.

Suspension of registration

Temporary withdrawal of an intermediary's right to carry on business pending inquiry; it may follow serious violations and is appealable to SAT.

Cancellation of registration

Permanent withdrawal of registration by SEBI for serious or repeated violations, non-payment of fees, or failure to meet fit-and-proper criteria.

Investor protection measures

Requirements such as segregation of client funds, transparent disclosure, complaint redressal, and fair dealing designed to safeguard investor interests.