Introduction
The term “authorised person” replaced the term “sub-broker” as part of regulatory amends made by the Securities and Exchange Board of India (SEBI). It refers to professionals authorised by trading members or stockbrokers to represent them and guide clients on trading and investment in securities. They sell different investment tools to investors - equities, commodities, currencies.
Pursuing a career as an authorised person is a good choice if you want to work in the finance sector. You must fulfil SEBI’s regulatory requirements and complete relevant training for it. You must also clear an authorised person exam and earn a certification. The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) conduct these exams.
Types of authorised person exams
There are two types of National Institute of Securities Markets (NISM) certifications with specific sub-broking exams.
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NISM-Series-XI exam
Also called the Equity Sales Certification Examination, the NISM-Series-XI exam is a voluntary exam. It evaluates your knowledge about the Indian equity market and its associated returns, risks, and taxes. The primary goal of this exam is to ensure that you can provide efficient services to investors when it comes to handling risks and operational processes of the stock market.
You must educate yourselves on the intricate details of the Indian equity market and understand concepts like risk management, settlement, and clearing to clear the exam.
The exam has 100 questions of one mark each. You must score a minimum of 50% to receive the authorised person certification. This certification has a validity of three years.
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NISM-Series-VIII exam
Also known as the Equity Derivatives Certification Examination, the NISM-Series-VIII exam is the second type of authorised person exam. It tests your knowledge of being the approved user for a salesperson or trading member in the Indian equity derivative segment.
While preparing for the exam, you must study the different derivative products the derivative markets offer, their associated risks, and regulations. You must also know about the exchange mechanism of settlement and clearing. Understanding the various strategies you can create using futures and options on the stock indices is also vital.
The exam has 100 questions of one mark each. There is also a negative marking system with a 0.25 negative mark for wrong attempts. You need at least 60% to pass the exam. Its certificate is valid for three years.
Tips to prepare for the authorised person exam
- Obtain relevant study material for the exam. You can download a soft copy from the NISM exam portal or buy a hard copy from authorised sellers.
- The workbook comprises around 100 to 200 pages. You must read it cover-to-cover at least once to understand the concepts.
- If a specific topic isn’t clear to you, you can use reference books or search the internet for more information.
- Appear for the exam only if most of the concepts are clear to you. The exam questions are conceptual.
- The questions are in a multiple-choice format with one correct answer only. There may also be a few numerical-type questions for which you can use calculators and Excel sheets.
- The NISM-series-VIII exam has a negative marking system. Thus, you should prepare well and answer carefully.
- Attempt mock exams to understand how well you are prepared. If you do well in the prep exams, you will be able to do well in the final exam also.
- You must attempt at least 80 questions to increase your chances of clearing the exam.
On the day of the exam, remember to bring your admit card and an identity card like the PAN Card. You must also carry a photocopy of the identity proof.
Conclusion
Authorised persons play a significant role in expanding market access, particularly for retail investors. They bridge the gap between investors and stockbrokers. They buy and sell securities on the client’s behalf.
You must clear the authorised person exam and get the required certifications to add weight to your resume and become a desirable candidate for employers.
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