Introduction
The count of individuals in India choosing to become full-time authorised persons has notably surged in recent years. This occupation presents considerable prospects for profitability, especially with the ongoing influx of new investors in the post-pandemic era. Numerous individuals consider venturing into this profession due to its minimal initial investment prerequisites and substantial backing from stockbrokers. Engaging in this endeavour also allows them to create their own identity.
To become an authorised person in India, you will need to possess certain skill sets and obtain certifications from the National Institute of Securities Markets (NISM). The NISM carries out different authorised person exams at specified intervals to provide these certifications.
In this blog post, you will delve into the intricacies of the NISM’s authorised person exams, including the exam fees, preparation tips, and more. Keep reading.
Who is an authorised person?
Before delving into the authorised person exams, you must know who an authorised person is. An authorised person refers to an individual or entity authorised by a stockbroking firm and the Securities and Exchange Board of India (SEBI) to provide stockbroking services to clients. These services may include opening a Demat account, placing buy and sell orders on the stock exchanges, and ensuring the execution of these orders during market hours.
An authorised person can even provide investment advice to their clients and represent the parent company in legal matters.
Skill sets required to become an authorised person
The primary role of an authorised person is to provide clients with informed recommendations regarding the buying and selling of stocks, enabling them to maximize their profits. Therefore, they must possess accurate and up-to-date knowledge of the stock market and financial principles. They should also be aware of global economic conditions and other factors such as legislation on the performance of the stock market.
As an authorised person, you should effectively communicate all aspects of the stock market to your clients. Additionally, possessing basic computer skills is essential for accurately maintaining client information and financial records.
Authorised person exams you need to know
To qualify as an authorized person for a stockbroking firm, you can pursue two types of NISM certifications, each with a sub-broking exam. They are as follows:
The NISM-Series-XI exam, also known as the Equity Sales Certification Examination, is a voluntary authorized person exam. Applicants registering for this exam need to have a valid PAN card and pay a one-time fee of Rs. 1,770 plus the applicable taxes. The primary objective of this exam is to enhance the quality of services offered to investors, particularly concerning the operational procedures of the stock market and risk management.
The NISM-Series-XI exam comprises 100 multiple-choice questions (MCQs) carrying one mark each. The applicant has two hours to complete the paper. To obtain an authorised person certification, an applicant needs to score at least 50% in this MCQ exam. Once obtained, the certificate remains valid for three years from the date of issue.
The NISM-Series-VIII exam is the second exam authorised person aspirants can opt for. This exam is also known as the Equity Derivatives Certification Examination. The primary objective of this exam is to evaluate the applicant’s knowledge of India’s equity derivatives segment. The applicant needs to pay a fee of Rs. 1,500 (plus the applicable taxes) to appear for the NISM-Series-VIII exam.
Like the NISM-Series-XI, the NISM-Series-VIII examination lasts for two hours and comprises 100 MCQs carrying one mark each. For every wrong answer, 0.25 negative marking is given. The minimum passing score to obtain an authorised person certification through this exam is 60.
How to prepare for authorised person exams?
Different authorised person exams require different preparations. To prepare for the voluntary NISM-Series-XI exam, the candidate can study the Indian equity markets thoroughly. One can learn the risk-return proposition the stock markets offer and the taxes related to investments.
Similarly, to prepare for the NISM-Series-XI exam, the candidates can familiarise themselves with the equity derivatives segment. They can learn different strategies that can help investors make profits from stock derivatives.
To conclude
Mentioned above are the two authorised person exams, each testing different skill sets of candidates. One can clear either or both exams to obtain a sub-broker certification.
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