Securities Operations and Risk Management book by National Institute of Securities Markets

Securities Operations and Risk Management (SORM) is designed to establish a common minimum knowledge benchmark for associated persons of stockbrokers, trading members, and clearing members. These associated persons are those who handle client assets or funds, deal with investor grievances, work in internal control or risk management, or perform any activity having a bearing on operational risk in the securities market. Anchored in SEBI's regulatory framework, the workbook explains how India's securities market operates, how trades are executed and settled, how risks are identified and mitigated, and how investor interests are safeguarded. It is tightly aligned with the examination objectives, covering understanding of products and participants, the regulatory framework, the trade life cycle, broker operations, risk management, clearing & settlement, and grievance redressal.

This book is intended for the following audience:

• Associated Persons of Stockbrokers, Trading Members, and Clearing Members responsible for:
• Handling client funds and securities
• Internal controls, compliance, and operational risk
• Managing investor grievances and regulatory reporting
• Operations, Risk Management & Back-Office Professionals working in broking firms
• Compliance Officers & Surveillance Teams seeking to meet regulatory competency requirements
• Students & Job Aspirants looking to establish a strong foundation in securities operations
• Professionals from FinTech, Depositories, Custodians & Market Intermediaries wishing to deepen their understanding of market processes
• Candidates preparing for the NISM-Series-VII: SORM Certification Examination

The Present Publication is the June 2025 Workbook Version, developed in collaboration with the Certification Team of NISM in coordination with Mr Sunil Gawde, Subject Matter Expert. It is published exclusively by Taxmann, with the following noteworthy features:

• [End-to-End Coverage of Broker Operations] From client onboarding and KYC to order routing, risk management, clearing & settlement, record-keeping, and compliance
• [Market-wide Context] Detailed treatment of the money market, securities market segments, products, and the role of MIIs (stock exchanges, clearing corporations, depositories)
• [Regulation-heavy yet Practitioner-friendly] Integrates SEBI Act, SCRA, Depositories Act, Companies Act, PMLA, Insider Trading and PFUTP Regulations, KRA Regulations, AML guidelines, and SEBI circulars into operational narratives
• [Current Market Infrastructure] Includes T+1 rolling settlement (fully implemented) and the beta version of optional T+0 settlement, interoperability among clearing corporations, cyber-security and IRRA platform, and upstreaming of client funds
• [Risk Management Focus] Explains VaR, ELM, MTM, delivery margins, liquid assets, base minimum capital, pre-trade risk controls, risk-reduction mode, stress testing, SGF, and Core SGF waterfall
• [Investor-centric Approach] Covers investor grievance redressal, online dispute resolution, SCORES, arbitration, Investor Protection Fund, GSM and ASM
• [Pedagogical Aids] Each chapter begins with learning objectives and ends with sample questions for self-assessment, reinforcing exam-oriented learning

The workbook provides a structured deep dive into:

• Basics of the Indian Securities Market
• Market structure
• Products – Equities, debt, derivatives, and more
• Market participants and their respective roles
• Regulatory Framework
• SEBI's functions and oversight
• Compliance obligations for intermediaries
• Regulatory reporting and disclosures
• Trade Life Cycle (TLC)
• Step-by-step flow from order placement to settlement
• Participants involved at each stage
• Brokerage Firm Operations
• Front Office – Order execution, client interaction
• Middle Office – Risk checks, confirmations
• Back Office – Record-keeping, settlement, reconciliations
• Clearing and Settlement Systems
• Clearing corporations
• Roles of clearing members and custodians
• Settlement cycles, margining, fund/securities movement
• Risk Management
• Operational risk
• Risk containment mechanisms
• Monitoring, surveillance, and controls
• Investor Grievance Redressal
• Mechanisms for complaint handling
• SCORES platform process
• Arbitration and dispute resolution framework

Pedagogically, the workbook is built as a complete learning pathway:

• Learning Objectives at the start of each chapter clearly enumerate what the candidate should know after completing the chapter
• Conceptual Exposition, Regulatory Text & Market Practice are interwoven, so that every process (e.g., client onboarding, margining, or AML checks) is simultaneously explained in 'what, how, and under which regulation' terms
• Tables, Flow Diagrams & Examples—such as trade life cycle schematics and sample order book snapshots—translate abstract rules into operational steps
• Sample Questions at the end of each chapter mirror exam style and force reinforcement of key concepts
• Syllabus Outline with Weightages (Chapter 1 to 8) helps candidates prioritise study efforts for high-weightage topics like broking operations, risk management, clearing & settlement