In any Indian stockbroking company, an authorized person plays a vital role in providing financial aid and investment products as well as services to her clients. To become an authorized person in India, it is essential that one clear the authorised persons exam, after which one receives the privilege to perform a variety of functions such as handling client portfolios, executing trades, and providing assistance to the client’s investments and trades. The National Institute of Securities Markets (NISM) carried out the different authorised person exams in India today. NISM is an educational institution that was established by the Securities and Exchange Board of India (SEBI) in the year 2006.
To become a stockbroking firm’s authorized person, there are two kinds of NISM certifications with their own sub-broking exams that you can opt for. These are explained below as follows:
The NISM-Series-XI exam is a voluntary authorised persons exam also known as the Equity Sales Certification Examination. To register for this exam, individuals would have a valid PAN Card. Individuals should also have a general understanding of equity sales so they can easily grasp the things that occur in equity markets. The main goal of these exams is to provide better services to the investor, when it comes to operational processes of the stock market as well as handling risk.
To prepare for this type of exam, one needs to thoroughly educate themselves on the ins and outs of the Indian equity market. This includes looking at the returns, risks and any taxes that are associated with it. One should also make sure that they are clear on any concepts such as settlement, clearing and the management of risk, particularly when it comes to how the equity market operates. Clearing this exam helps establish that one possesses a strong understanding about the operations of the Indian equity market.
Hence, even if one does not have a good grasp of all these, it’s required that you study them thoroughly so you can get this certification. To appear for this exam, which lasts two hours, afee of ₹1770 along with service tax and payment gateway charges will be applied. One will be required to complete 100 questions, each of which carry 1 mark. In order to receive the authorized person certification one has to score a minimum of 50%. One’s certification will remain valid for three years.
This is the second type of authorised person exam in India and is also referred to as the Equity Derivatives Certification Examination. It gauges one’s knowledge as an approved user or sales personnel for a trading member on India’s equity derivative segment. Hence, to prepare for this ecam, one should be well versed in the variety of products that are offered on India’s derivatives markets, the risks associated with these products as well as any regulations. One should also learn about the exchange mechanism that regulates how settlements and clearing will occur. In general, one should prepare to be knowledgeable about the various regulations that govern how India’s security market functions.
Having the knowledge about the varying strategies one can use to build the futures and options on the stock indices is also needed. For this exam, the fee is ₹1500 in addition to any extra payment gateway charges. Overall, the exam is 100 marks and lasts for 120 minutes. Each exam question carries 1 mark, with a 0.25 negative marking for wrong attempts. Unlike the prior exam, to pass, a candidate needs a percentage of at least 60. The validity of the certification earned from passing this exam is 3 years.
The Bottom line
There are two types of sub-broking exams in India, each testing a different set of skills. The certifications obtained from each exam are different. One can opt for one exam or both to receive the qualification of being an authorized person in India. For both of these exams, it is required that candidates provide their updated Income tax Permanent Account Number during the process of registration. This will ensure that one can receive their passing certificate without any hassles. Once either or both of the authorised person exams are cleared, the candidate can professionally call themselves an authorized person and begin practicing.