n NISM Certifications
VII NISM Series VII
Medium

When there is a shortfall in the margin amount, what happens to the trading member?

Practice question from NISM Series VII Mock Test 6 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    The Exchange will request SEBI to cancel the member’s registration

  2. B

    A warning will be issued to the broker by the Exchange

  3. C

    The limits of the broker will be reduced by the Exchange

  4. Terminals of the broker shall be immediately deactivated

    Correct answer

Why this is the answer

If a broker has a margin shortfall, their trading terminals are immediately deactivated to prevent further trading until the shortfall is covered.

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