n NISM Certifications
VII NISM Series VII
Medium

Regarding institutional transactions confirmed by custodians, _______.

Practice question from NISM Series VII Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Margins from institutions are collected on an upfront basis

  2. Margins shall be levied on the custodians

    Correct answer

  3. C

    Margins from institutions are collected on execution of the trade

  4. D

    Margins from institutions are not collected

Why this is the answer

Institutional trades in the cash market are subject to margin requirements like other investors. For transactions confirmed by custodians, the margin obligation is levied on the custodians rather than directly on the institutions.

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