NISM Series XXV-B study guide
NISM Series XXV-B · Work through your exam, one topic at a time.
NISM-Series-XXV-B is a National Institute of Securities Markets certification examination titled 'Persons Associated with Investment Advice (Sales and Other Non-Core Services)'. NISM is a public trust established in 2006 by the Securities and Exchange Board of India (SEBI), the regulator of the securities markets in India, and it publishes this module within its family of SEBI-mandated and non-mandated certifications for securities-market professionals. The NISM Series XXV-B study guide has 5 sections and about 1,715 words.
01The Indian securities market and its regulatory architecture
India's securities market rests on four statutes: the Securities Contracts (Regulation) Act, 1956 (exchanges and contracts), the SEBI Act, 1992 (which creates SEBI's statutory powers of regulation, investigation and adjudication), the Depositories Act, 1996 and the Companies Act, 2013 (issuance, listing, governance). After the merger of the Forward Markets Commission into SEBI in 2015, commodity derivatives are also regulated by SEBI .
319 words, about 2 min02Investment advice and the roles of persons associated with it
Under the SEBI (Investment Advisers) Regulations, 2013, "investment advice" means advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products - including advice on an investment portfolio - given for consideration in any form (money, securities, or otherwise) and by any mode of communication. Advice on financial planning is covered only to the extent it concerns securities.
383 words, about 2 min03Sales, distribution and other non-core services: permitted boundaries
An adviser may offer implementation/execution services and distribution - but the law insists the two businesses be segregated : separate personnel, separate infrastructure, separate records and separate revenue accounting, with written client consent and clear disclosure of the capacity in which the firm is acting in each interaction. If the firm distributes mutual funds it needs the AMFI ARN ; insurance distribution needs the IRDAI licence; real-estate or estate-planning services must comply with their own laws.
357 words, about 2 min04Client onboarding, KYC and documentation
A defensible onboarding file contains, in order: (1) identification and KYC - PAN, proof of identity and address, verification through a SEBI-registered KYC Registration Agency (KRA) , Aadhaar-based e-KYC where permitted, and compliance with the Prevention of Money Laundering Act, 2002 and its rules; (2) client categorisation and risk profiling - capturing age, income, liabilities, horizon, liquidity needs and risk tolerance; (3) suitability mapping of recommendations to that profile; (4) a signed investment advisory agreement stating scope, fees, termination, conflicts and grievance redressal; (5) fee consent and mandate with the prescribed fee cap and mode of payment; and (6) periodic re-KYC , whose frequency depends on the client's risk categorisation, with enhanced due diligence for high-risk clients, politically exposed persons and beneficial owners of non-individual clients. Confusing KYC (identity/AML) with risk profiling (suitability).
315 words, about 2 min05Ethics, conflicts of interest, grievance redressal and compliance
The adviser's code of conduct runs on honesty, fairness, transparency, due diligence, confidentiality and priority of the client's interest over the firm's. Conflicts must be identified, disclosed and managed - never hidden.
341 words, about 2 min