n NISM Certifications
X NISM Series X
Medium

How do clearing corporations protect against defaults in stock exchange trades?

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Holding funds in escrow

  2. Margin requirements

    Correct answer

  3. C

    Net payment processing

  4. D

    Depository services

Why this is the answer

Margin requirements ensure traders maintain sufficient collateral to cover potential losses, reducing default risk.

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