National Institute of Securities Markets

Communiqu/Press Release
NISM-Series-XII: Securities Markets Foundation Certification Examination
NISM/Certification/NMD/Series-XII: SMF/2013/01 dated March 01, 2013
National Institute of Securities Markets (NISM) announces the launch of NISM-SeriesXII: Securities Markets Foundation Certification Examination for entry level
professionals, who wish to make a career in the securities markets. This certification
examination will also be useful to all those individuals who are interested in acquiring a
basic knowledge of the Indian Securities markets, including:
Entry level professionals in the securities markets
Employees of intermediaries functioning in the securities industry
Professionals in other industries interested in gaining knowledge of the securities
markets
Students
Homemakers
Teachers
The examination will be available to all.
The NISM-Series-XII: Securities Markets Foundation Certification Examination, offered
by NISM, will be available from March 21, 2013.
Details of NISM-Series-XII: Securities Markets Foundation Certification Examination are
given in Annexure-I and Annexure-II attached to this communiqu/press release.
The text of these Annexures and the registration details are available at
www.nism.ac.in.

G. P. Garg
Registrar

Enclosures: Annexure I and II

Annexure I Syllabus Outline

NISM-Series-XII: Securities Markets Foundation Certification Examination
Objective of the Examination
The NISM-Series-XII: Securities Markets Foundation Certification Examination aims to
impart basic knowledge about the Indian Securities Markets and different rules and
regulations governing the securities markets.
This certification examination will also be useful to all those individuals who are
interested in acquiring a basic knowledge of the Indian Securities markets, including:
Entry level professionals in the securities markets
Employees of intermediaries functioning in the securities industry
Professionals in other industries interested in gaining a knowledge of the
financial markets
Students
Housewives
Teachers
On successful completion of the examination the candidate should:
Know the basics of the Indian Securities Markets.
Know the various processes involved in Primary and Secondary Markets
Understand the schemes and products in Mutual Funds and Derivatives Markets
in India.
Know the steps in financial planning process.

Examination Specifications
This is a computer-based examination with multiple choice questions.
The examination consists of 100 questions of 1 mark each adding to 100 marks.
The examination should be completed in 2 hours.
There shall be no negative marking.
The passing score for the examination is 60 marks.

NISM-Series-XII: Securities Markets Foundation Certification Examination

Syllabus Outline with Weightages

Chapter
No.
1
2
3
4
5
6
7

Chapter Name
Introduction to Indian Securities Markets
Securities: Types, Features and Concepts
Primary Markets
Secondary Markets
Mutual Funds
Derivatives Markets
Financial Planning and Securities Markets

Weightages
%
5
20
15
20
20
10
10

Annexure -II
Test Objectives for NISM-Series-XII: Securities Markets Foundation Certification
Examination
Chapter 1: Introduction to Indian Securities Markets
1.1. Understand the meaning of securities and securities markets
1.1.1. List the key functions of securities markets participants
1.2. Describe the structure of securities markets and role of its participants
1.2.1. Investors
1.2.2. Issuers
1.2.3. Intermediaries
1.2.4. Regulators
1.3. Understand the role of securities markets as allocators of capital

Chapter 2: Securities: Types, Features and Concepts

2.1. Define and differentiate equity and debt securities
2.2. Explain the features of equity capital
2.3. Explain the features of debt capital
2.4. Understand the factors that influence the choice between equity and debt capital for issuers
2.5. Describe the various aspects of investing in equity
2.5.1. Understand the concepts and differences between price and intrinsic value
2.5.2. Describe the equity investing process
2.6. Describe the concepts and elements of financial analysis and valuation
2.7. Define and describe commonly used terms in equity investing
2.8. Explain the risk and return from investing in equity
2.9. Explain the basic features of debt instrument
2.10. List the types and structure of debt instruments
2.10.1. Distinguish between various types, tenors and structures of debt instruments
2.10.2. Explain the classification of debt market instrument
2.10.2.1. Describe various types of money market Instruments
2.10.2.2. Describe government securities and their features
2.10.2.3. Describe Corporate bonds and debentures and their features
2.11. Understand concepts and terms relating to debt securities
2.11.1. Time Value of money
2.11.2. Yield and Price
2.11.3. Yield to maturity
2.12. Benefits and risks of investing in debt securities
2.13. Describe the factors that influence the choice between equity and debt for investors
2.14. Describe hybrid instruments and their features
2.14.1. Preference shares
2.14.2. Convertible debentures
2.14.3. IDRs, GDRs and ADRs
2.14.4. Foreign Currency Convertible Bonds

Chapter 3: Primary Markets

3.1. Understand the nature and functions of the primary market
3.1.1. Define primary markets

3.1.2. List and describe the functions of the primary markets

3.1.3. Differentiate the primary market from the secondary market
3.2. Define and differentiate various types of public issues
3.3. List the categories of issuers in the primary markets
3.4. Describe the regulatory framework for primary markets
3.4.1. List the key regulations for public issues
3.5. List the types of investors in the primary markets
3.6. Describe the types of public issues of equity shares
3.6.1. Define and differentiate IPO and offer for sale
3.6.2. Define and differentiate initial and follow on offer
3.7. Describe the pricing process in a public issue of shares
3.7.1. Fixed price issue
3.7.2. Book built issue
3.8. Describe the public issue process
3.8.1. Constituents in a public issue
3.9. Define and list the features of a prospectus
3.10. Describe the process of applying to a public issue
3.10.1. Basis of allotment
3.10.2. Green shoe option
3.11. Understand listing of public issues
3.11.1. Overpricing of new issues
3.12. Describe rights issues in equity
3.13. Understand the process and concepts in public issue of debt securities
3.14. Describe private placements in equity and debt

Chapter 4: Secondary Markets

4.1. Describe the role and list the functions of the secondary markets
4.2. List and describe the market structure and participants
4.2.1. Stock exchanges and members
4.2.2. Issuers and Investors
4.2.3. Trading, Clearing and Risk Management
4.2.4. Depositories, DPs and Custodians
4.2.5. Regulation of Secondary markets
4.3. Describe the role of brokers and processes for client acquisition
4.3.1. Brokers and sub-brokers
4.3.2. Client acquisition process
4.3.3. 3-in-1 accounts
4.3.4. Power of Attorney
4.4. Understand how a secondary market transaction is executed
4.4.1. Electronic Trading system
4.4.2. Orders and their types
4.4.3. Trade and order execution
4.4.4. Contract note
4.4.5. Cost of trading
4.5. Understand how a trade is settled
4.5.1. Delivery and squaring off
4.5.2. Determination of settlement obligation
4.5.3. Settlement cycle, pay-in and pay-out
4.5.4. Margins
4.5.5. Short delivery and payment
4.5.6. Corporate actions

4.5.7. Circuit breakers

4.6. Understand market information
4.6.1. Market size and activity
4.6.2. Reading market prices
4.6.3. Disclosures by listed securities
4.7. Understanding the risk management systems for secondary markets
4.7.1. Capital adequacy norms
4.7.2. Margins and penalties
4.7.3. Monitoring and inspection
4.8. List the rights, obligations and grievance redressal mechanism for investors in secondary
markets

Chapter 5: Mutual Funds

5.1. Describe the meaning and description of a mutual fund
5.1.1. Basic features of a mutual fund
5.1.2. Features of mutual fund products
5.2. Describe key terms and concepts associated with mutual funds
5.3. Understand how a mutual fund works
5.4. Know the regulatory framework for mutual funds
5.4.1. Features of Mutual Fund Regulation
5.4.2. Investor Service Standards
5.5. Define and distinguish the types of fund products
5.5.1. Equity funds
5.5.2. Debt funds
5.5.3. Hybrid funds
5.5.4. Other types of funds
5.6. Describe the processes associated with investing in mutual funds
5.6.1. PAN and KYC process
5.6.2. Purchases: NFO and Continuous offer
5.6.3. Redemptions
5.6.4. Non-financial transactions
5.6.5. Statement of accounts and demat form
5.6.6. Distributor commissions
5.7. Understand how systematic transactions are conducted and their uses
5.7.1. Systematic Investment Plan
5.7.2. Systematic Withdrawal Plan
5.7.3. Systematic Transfer Plan
5.7.4. Switches
5.8. Know how to use information available on mutual funds
5.9. List the costs and benefits of investing with mutual funds

Chapter 6: Derivatives Markets

6.1. Define derivative products
6.2. Describe key concepts with regard to derivatives
6.3. List types of derivative products and their features
6.4. Describe the structure of the derivative markets
6.5. Understand how derivatives are traded and settled
6.6. Describe the regulatory and risk management process for derivatives
6.7. Understand how derivatives are used in speculation, hedging and risk management
6.8. Describe the costs, benefits and risks of derivatives
6.9. Understand key derivative market indicators

Chapter 7: Financial Planning and Securities Markets

7.1. Understand the financial planning framework for investing in securities
7.2. Describe the steps in financial planning
7.3. Explain the asset allocation process and diversification
7.4. Describe how to use securities in the financial planning process