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SEBI Gr A 2018

LECTURE

5 MCQs on Securities Market

Mixed MCQs Set

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5 MCQs on Securities Market

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Question

Q.1) ______________ regulations requires promoters of a company to disclose details of their encumbered

shares including non-disposal undertakings (NDUs) by promoters which are covered under the scope of

disclosures of ‘Encumbrances’.

[a] SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

[b] SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

[c] SEBI (Prohibition of Insider Trading) Regulations, 2015

[d] SEBI (Alternative Investment Funds) Regulations, 2012

[e] None of the above

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Explanation

NDUs are typically undertakings given by a shareholder not to transfer or otherwisealienate the securities and are in the nature of negative lien given in favour of anotherparty, usually a lender.

Non-Disposal Undertakings (NDU)

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Explanation

• SEBI (Substantial Acquisition of Shares and Takeovers)Regulations, 2011, requires promoters of a company todisclose details of their encumbered shares includingNDUs by promoters which are covered under the scopeof disclosures of ‘Encumbrances’.

• Recently in news: SEBI had directed the depositories todevelop a separate module/transaction type in theirsystem for recording of non-disposal undertaking(NDU).

Disclosure of NDUs by Promoters

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Question

Q.1) ______________ regulations requires promoters of a company to disclose details of their encumbered

shares including non-disposal undertakings (NDUs) by promoters which are covered under the scope of

disclosures of ‘Encumbrances’.

[a] SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

[b] SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011*

[c] SEBI (Prohibition of Insider Trading) Regulations, 2015

[d] SEBI (Alternative Investment Funds) Regulations, 2012

[e] None of the above

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Question

Q.2) The traders are allowed to enter the Block Deal Orders only during the block deal window. Block deal

windows available to traders include:

[a] Morning Block Deal Window, Afternoon Block Deal Window and Evening Block Deal Window

[b] Morning Block Deal Window and Afternoon Block Deal Window

[c] Afternoon Block Deal Window and Evening Block Deal Window

[d] Morning Block Deal Window and Evening Block Deal Window

[e] None of the above

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Explanation

• SEBI in 2005 had prescribed guidelines for execution of block deals.

• A separate window is provided by the Exchange for executing block deals i.e. tradeshaving value greater than or equal Rs. 10 crores, executed through Block deal window.

• Block deal windows shall be available on all trading days in Equity segment. The tradersare allowed to enter the Block Deal Orders only during the block deal window as givenbelow:

a) Morning Block Deal Windowb) Afternoon Block Deal Window

BLOCK DEAL WINDOW MECHANISM

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Explanation

• Two FIIs (foreign institutional investors) want to trade 10%of a company's total number of shares.

• As this transaction involves trading of a large quantity ofshares, the risk factors entailing to this transaction areimmense.

• Thereby, the exchange on which trading will happen,allocates a separate trading window for these twoinvestors to exhibit a block deal, with the prime focus ofprohibiting risk.

For Example – Block Deal

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Solution

Q.2) The traders are allowed to enter the Block Deal Orders only during the block deal window. Block deal

windows available to traders include:

[a] Morning Block Deal Window, Afternoon Block Deal Window and Evening Block Deal Window

[b] Morning Block Deal Window and Afternoon Block Deal Window*

[c] Afternoon Block Deal Window and Evening Block Deal Window

[d] Morning Block Deal Window and Evening Block Deal Window

[e] None of the above

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Question

Q.3) Who among the following is entitled to incentives under Liquidity enhancement schemes (LES) in the

context of securities market?

[a] Blue Chip Listed Companies

[b] Stock Brokers and Market Intermediaries

[c] Retail Investors

[d] All of the above

[e] None of the above

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Explanation

• Under the liquidity enhancement schemes (LES), brokers and other marketintermediaries are given incentives for a specified period of time to bring inliquidity and generate investor interest in securities which have limited tradingactivity.

• Under this scheme, the stock exchanges to introduce incentive schemes for brokersand intermediaries to enhance liquidity in illiquid securities.

• SEBI during March 2018 permitted liquidity enhancement scheme (LES) incommodity derivatives contracts subject to certain requirements.

• Any commodity that is classified as a ‘Sensitive Commodity’ by the Exchange, shallnot be eligible for LES.

Liquidity Enhancement Scheme (LES)

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Question

Q.3) Who among the following is entitled to incentives under Liquidity enhancement schemes (LES) in the

context of securities market?

[a] Blue Chip Listed Companies

[b] Stock Brokers and Market Intermediaries*

[c] Retail Investors

[d] All of the above

[e] None of the above

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Question

Q.4) ISIN code is a _____________code that serves for uniform identification of a security.

[a] 12-character alphanumeric

[b] 12-character numeric

[c] 10-character alphanumeric

[d] 10-character numeric

[e] None of the above

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Explanation

• International Securities IdentificationNumber or ISIN Code is a unique code thatis used to identify specific securities.

• The National Numbering Agency (NNA) –which is separate for each country –allocates ISINs for the securities issued inthe country.

• All ISIN codes have 12 characters, and thiscode is made up of both letters andnumbers.

International Securities Identification Number (ISIN)

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Question

Q.4) ISIN code is a _____________code that serves for uniform identification of a security.

[a] 12-character alphanumeric*

[b] 12-character numeric

[c] 10-character alphanumeric

[d] 10-character numeric

[e] None of the above

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Question

Q.5) In the secondary market, the highest share in terms of traded turnover is held by:

[a] Equity derivatives segment

[b] Currency derivatives segment

[c] Equity cash segment

[d] Commodity derivatives segment

[e] None of the above

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Explanation

Highest Traded Turnover in Securities Market

In the secondary market, the highest share interms of traded turnover was held by

• equity derivatives at 86.3 per cent,

• currency derivatives (5 per cent),

• equity cash segment (4.3 per cent),

• commodity derivatives (3.1 per cent),

• corporate bonds (0.9 per cent) and

• interest rate derivatives (0.3 per cent).

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Question

Q.5) In the secondary market, the highest share in terms of traded turnover is held by:

[a] Equity derivatives segment*

[b] Currency derivatives segment

[c] Equity cash segment

[d] Commodity derivatives segment

[e] None of the above

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