NISM Series VII (SORM) common mistakes
NISM Series VII (SORM) · Understand the traps and how to avoid them.
Treating settlement as T+2 in every market and ignoring that Indian equity settlement is T+1 while debt, government securities, and many cross-border legs run on different cycles, then answering a settlement-timeline question with a single blanket rule.
Candidates memorise one cycle from a study note or from older material and reuse it everywhere; the exam deliberately tests the exceptions (T+1 equities, T+0 optional, repo and G-sec conventions, FX and ADR legs).
What to do instead
Build a one-page table of instrument versus settlement cycle versus governing rule (exchange, CCIL, RBI, SEBI) and rehearse it until each row can be recalled without the table; when a question names an instrument, state the cycle before reading the options.
Confusing the roles of clearing corporation, clearing member, custodian, and depository, so that a question about who guarantees settlement or who holds securities in demat form is answered by picking the wrong institution.
These entities overlap in daily conversation and candidates collapse them into a generic 'back office'; the exam tests the legal boundary of each function, especially novation and the settlement guarantee fund.
What to do instead
Write a short function map for each entity: who contracts, who novates, who guarantees, who holds custody, who records ownership. Then answer by asking 'which of these four actions is the question actually about?' before choosing.
Applying the trade-date versus settlement-date accounting distinction inconsistently, for example booking a purchase on trade date but computing the position or margin impact on settlement date in the same answer.
Candidates learn both conventions separately and never reconcile them, so under exam pressure they mix the two within one scenario.
What to do instead
Adopt a rule: identify the date basis the question specifies, state it explicitly, and carry it through every step of the calculation. Practise a set of questions where the same trade is booked on both bases to see where the numbers diverge.
Computing margin or exposure without distinguishing initial margin, variation margin, and maintenance margin, or without netting eligible positions before applying the rate.
The formulas look similar and candidates apply whichever they remember first; they also skip the netting step because it is easy to overlook in a long scenario.
What to do instead
Write the formula for each margin type side by side with its trigger and purpose, then solve three worked examples where netting changes the answer. Always show the netting step as a separate line before multiplying by the rate.
Treating risk categories as interchangeable, so a credit-risk question is answered with a market-risk measure such as duration or VaR, or an operational-risk event is classified as a market loss.
Candidates match on keywords like 'loss' or 'exposure' rather than on the source of the risk, and exam stems often include several risk words to distract.
What to do instead
Classify by source before computing: does the loss arise from price movement, counterparty default, process failure, or liquidity? Answer the classification question first, then select the measure that belongs to that class.
Ignoring the corporate-action adjustment when computing a position, entitlement, or ex-date price, and answering with the unadjusted figure.
Corporate actions appear as background detail in a long stem, and candidates focus on the arithmetic they recognise rather than on the adjustment the question is testing.
What to do instead
Scan every stem for dates, record dates, ratios, and dividend terms before starting the calculation; if any are present, write the adjustment factor on the scratch sheet first and apply it before any other step.
Misreading the direction of a reconciliation break, that is, stating which side is short or excess without anchoring to the correct reference ledger, so the sign of the difference is reversed.
Candidates compute the magnitude correctly but assign the direction by habit, and exam options often differ only in the sign or in which ledger is named.
What to do instead
Always write the reference ledger on the left and the comparison ledger on the right before subtracting, then state the result as 'reference minus comparison'. Recheck the sign against the named ledger in the options.
Answering regulatory and reporting questions from general principles instead of the specific obligation, for example naming the wrong reporting frequency, the wrong regulator, or the wrong threshold for a disclosure.
Candidates rely on plausible-sounding reasoning because they never fixed the specific numbers and bodies in memory, and several Indian regulators share overlapping territory.
What to do instead
Maintain a compact obligation register: obligation, regulator, frequency, threshold, and consequence of breach. Drill it by covering the frequency column and recalling it, not by re-reading the full table.
Skipping the units and currency check in numerical questions, mixing lakh and crore, or mixing basis points with percentage points, and then selecting an option that matches the wrong scale.
Under time pressure candidates compute correctly but convert incorrectly, and the exam includes distractor options that are exactly the right number at the wrong scale.
What to do instead
Write units next to every number as you compute and convert to a single scale before comparing with options. If an option matches your digits but not your scale, treat it as a trap and recompute.
Spending disproportionate time on one long scenario question early in the paper, leaving too little time for the many short definitional questions later, and rushing the final section.
Candidates treat every question as equally weighted in effort and are reluctant to abandon a half-solved calculation, which compounds into a time deficit.
What to do instead
Do a first pass answering only questions solvable in under a minute, mark the rest, and return with a hard per-question time cap. Practise full-length timed sets so the cap becomes automatic rather than a conscious decision.