NISM Series XXV-B key terms

The Securities and Exchange Board of India, the statutory regulator of the Indian securities market, empowered to register and supervise intermediaries, protect investors and promote orderly market development.

The Act of Parliament that created SEBI and gave it statutory powers over stock exchanges, intermediaries, mutual funds and market practices, forming the legal base of Indian securities regulation.

The law that governs trading in securities, provides for recognition and regulation of stock exchanges and defines which instruments are treated as securities for exchange-based trading.

A recognised platform on which buyers and sellers trade listed securities under SEBI-regulated rules, providing price discovery, transparency and a liquid secondary market for investors.

An entity registered with SEBI that holds investors' securities in electronic form, such as NSDL or CDSL, removing the need for physical share certificates and enabling easy transfer.

An account opened with a depository participant in which an investor's shares, bonds and mutual fund units are held electronically and used for holding and transferring securities.

An entity that acts as the central counterparty to exchange trades, guaranteeing settlement and managing counterparty risk between the buying and selling members.

The segment in which a company or other issuer sells securities to investors for the first time, raising fresh capital through public offers, rights issues or private placements.

The segment in which securities already issued are bought and sold between investors on stock exchanges, giving liquidity to holders while the issuing company receives no new money.

The first sale of a company's shares to the general public, through which it lists on a stock exchange, raises capital and creates a market for its shares.

A mechanism through which existing shareholders, rather than the company itself, sell their shares to investors using the exchange platform; the company receives none of the proceeds.

An offer of new shares by a company to its existing shareholders in proportion to their holdings, usually at a discount, before the shares are offered to outsiders.

Application Supported by Blocked Amount: a facility in public issues where the subscription money remains blocked in the investor's bank account and is debited only when shares are allotted.

The settlement cycle prescribed by SEBI in which securities and funds are exchanged on the first working day after the trade date, so each trade settles independently of others.

A person registered with SEBI who, for consideration, advises clients on securities and investment products, and is bound by fiduciary, suitability and disclosure duties.

The regulations that set out registration, qualification, conduct, fee, disclosure and record-keeping requirements for investment advisers and their representatives in India.

An adviser's duty to act in the client's best interest ahead of its own, dealing fairly, disclosing conflicts and placing client interests above personal or commercial gain.

The requirement that every piece of advice matches the client's risk tolerance, financial position, investment objective and experience, based on information collected at onboarding and reviewed periodically.

The structured process of assessing a client's ability and willingness to bear risk, usually through a documented questionnaire, to arrive at a suitable asset allocation and product mix.

The charge an investment adviser levies for providing advice, which must be within SEBI's limits, disclosed clearly to the client and kept distinct from any distribution commission.

An adviser whose entire remuneration comes from clients and not from product manufacturers or distributors, a model that reduces conflicts of interest in the advice given.

The senior individual designated by an investment adviser who is responsible for overall supervision of the advisory business, compliance with regulations and conduct of representatives.

A mandatory certification, obtained by passing the relevant NISM examination and renewed periodically, that an individual must hold to act as an investment adviser or its representative.

Remuneration paid by a product manufacturer or distributor to a seller of its products; an adviser must avoid or fully disclose such payments because they can bias recommendations.

A service in which an intermediary merely carries out a client's purchase or sale instruction without giving any advice, and which must be kept separate from advisory activity.

Activities an investment adviser may offer beyond pure advice, such as financial planning or execution support, permitted subject to conditions, disclosure and avoidance of conflicts.

The internal separation an adviser must maintain between the advice function and any distribution or execution function, so that commissions and brokerage do not influence recommendations.

The mandatory process of identifying a client, verifying identity and address, understanding financial position and objectives, and updating the information periodically.

A written contract between adviser and client recording the services offered, fees, mode of advice, termination terms and required disclosures, as prescribed by the IA Regulations.

A document explaining the risks of investing in securities and stating that the adviser does not guarantee returns, which the client must read and acknowledge before advice begins.

The obligation of an adviser to retain client documents, advice records and fee details for the period prescribed by SEBI and to produce them to the regulator on demand.

The set of legal duties requiring intermediaries to verify client identity, watch for suspicious transactions and report them to the authorities, closely linked to KYC processes.

A situation in which an adviser's personal, commercial or related-party interest could influence the advice given, and which must be avoided, disclosed or managed in the client's favour.

The standards of behaviour prescribed for investment advisers covering honesty, fairness, confidentiality, priority to client interest and proper disclosure of conflicts and charges.

SEBI rules that prohibit dealing in securities while in possession of unpublished price-sensitive information and bar communication of such information to others.

SEBI regulations banning manipulative, deceptive and unfair dealings in securities, including misleading statements, price rigging and creating a false market.

The designated person responsible for monitoring an intermediary's adherence to regulations, handling investor complaints, maintaining records and reporting compliance matters to SEBI.

SEBI's online complaint redress system through which investors lodge grievances against listed companies and registered intermediaries, which must be resolved within prescribed timelines.

The documented internal process an intermediary must maintain for receiving, escalating and resolving client complaints within set timelines, with records of each complaint kept.