NISM Certifications Specialized and Institutional Certifications Syllabus

Specialized and Institutional Certifications syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Specialized and Institutional Certifications in NISM Certifications, not a summary of it.

1. 1

   Portfolio Management Services

   3 topics

   • SEBI (Portfolio Managers) Regulations, 2020
     • Registration and net worth requirements
     • Discretionary versus non-discretionary PMS
     • Minimum investment and fee disclosures
   • PMS Operations and Reporting
     • Client agreement and disclosure document
     • Performance reporting standards
     • Audit and compliance
   • PMS Investment Approaches
     • Model portfolios and benchmarking
     • Risk management in PMS
2. 2

   Alternative Investment Funds

   3 topics

   • SEBI (AIF) Regulations, 2012
     • Category I, II, and III AIFs
     • Registration and structure
     • Investor eligibility and commitments
   • AIF Operations and Compliance
     • Fund structuring and governance
     • Valuation and reporting
   • AIF Strategies and Taxation
     • Private equity and venture capital
     • Pass-through taxation
3. 3

   Fixed Income and Debt Markets

   3 topics

   • Bond Fundamentals
     • Coupon, yield, and maturity
     • Yield to maturity and current yield
     • Bond pricing
   • Interest Rate Risk and Duration
     • Macaulay and modified duration
     • Convexity
     • Yield curve dynamics
   • Money Market and Government Securities
     • T-bills, CPs, and CDs
     • G-Secs and SDLs
     • RBI auctions and primary dealers
4. 4

   Merchant Banking and Investment Banking

   3 topics

   • Merchant Banking Operations
     • Issue management and due diligence
     • SEBI (Merchant Bankers) Regulations
     • Underwriting
   • Corporate Restructuring
     • Mergers and acquisitions
     • Takeover code and open offers
     • Buyback and delisting
   • Advisory and Capital Raising
     • Debt syndication
     • Valuation for transactions
5. 5

   REITs, InvITs and Emerging Products

   3 topics

   • Real Estate Investment Trusts
     • Structure and units
     • Distribution and taxation
   • Infrastructure Investment Trusts
     • Structure and regulatory framework
     • Income distribution norms
   • Social Stock Exchange and ESG
     • Social enterprises and instruments
     • ESG disclosure and BRSR

Specialized and Institutional Certifications flashcards for NISM Certifications

22 of 50 cards from the Specialized and Institutional Certifications deck — real questions with worked answers.

1. Under SEBI (Portfolio Managers) Regulations, 2020, what is the minimum net worth required for a portfolio manager?

   Rs. 5 crore (raised from Rs. 2 crore under the 2020 regulations).

2. What is the minimum investment amount a client must place with a portfolio manager under the SEBI PMS Regulations, 2020?

   Rs. 50 lakh (increased from Rs. 25 lakh).

3. What are the two broad categories of portfolio management services offered under SEBI PMS Regulations?

   Discretionary PMS (manager decides investments independently) and Non-discretionary PMS (manager invests per client's directions); advisory services are also permitted.

4. Under PMS Regulations 2020, into which instruments can a portfolio manager invest a client's unlisted-securities allocation, and what is the cap?

   A discretionary portfolio manager may invest up to 25% of the client's assets under management (AUM) in unlisted securities.

5. What document must a portfolio manager provide to a prospective client at least 2 days before signing the agreement, and what does it contain?

   The Disclosure Document, containing fees, risks, performance, related-party transactions, and other prescribed disclosures; it must be filed with SEBI.

6. In PMS, what is the 'high water mark' principle for charging performance fees?

   Performance fees are charged only on profits exceeding the highest portfolio value previously achieved (the high water mark), preventing the manager from charging fees twice on the same gains after a recovery from a drawdown.

7. How often must a portfolio manager send a report to each PMS client, and what must it include?

   At least once every 3 months (quarterly); it must include portfolio composition, transactions, beneficial interest, dividends/interest, expenses, and risk details.

8. What is the maximum exit load a PMS provider can charge, per SEBI norms?

   In the first year up to 3%, in the second year up to 2%, in the third year up to 1%, and no exit load after 3 years.

9. What benchmarking requirement did SEBI introduce for PMS to enable performance comparison?

   Portfolio managers must report performance against a prescribed benchmark; SEBI mandated a uniform standard of three benchmarks per strategy via APMI (Association of Portfolio Managers in India).

10. What are the three main types of 'investment approaches' a PMS may disclose for an equity strategy?

    Examples include Large-cap, Mid/Small-cap, Multi-cap, Value, Growth, and Thematic/Sectoral approaches, each defined by investment objective, universe, and benchmark.

11. Under SEBI (AIF) Regulations, 2012, what is an Alternative Investment Fund?

    A privately pooled investment vehicle (incorporated in India) that collects funds from investors for investing per a defined policy, and is not covered by SEBI's mutual fund or collective investment scheme regulations.

12. What are the three categories of AIFs under the SEBI (AIF) Regulations, 2012?

    Category I (socially/economically desirable - VC, SME, infrastructure, social venture funds), Category II (PE and debt funds with no leverage), and Category III (hedge funds and complex strategies using leverage/derivatives).

13. What is the minimum corpus required for an AIF scheme (other than an Angel Fund)?

    Rs. 20 crore per scheme (Rs. 10 crore for an Angel Fund).

14. What is the minimum investment by an investor in an AIF, and the exception for angel funds?

    Rs. 1 crore per investor (Rs. 25 lakh for employees/directors of the AIF or manager); Angel Fund investors must invest minimum Rs. 25 lakh.

15. What is the maximum number of investors allowed in an AIF scheme?

    1,000 investors per scheme (an Angel Fund may have up to 1,000 angel investors; LLP-structured AIFs are limited to 200).

16. What is the minimum continuing interest (skin in the game) the manager/sponsor must maintain in a Category I or II AIF?

    Lower of 2.5% of corpus or Rs. 5 crore; for Category III AIF it is lower of 5% of corpus or Rs. 10 crore.

17. Which AIF category is permitted to engage in leverage and complex/diverse trading strategies?

    Category III AIF (e.g., hedge funds); Category I and II AIFs cannot borrow except for temporary funding needs up to 30 days, 4 times a year, capped at 10% of investable funds.

18. How is income from a Category I and Category II AIF generally taxed in India?

    They enjoy 'pass-through' status - income (except business income) is taxed in the hands of investors, not the fund. Business income is taxed at the fund level.

19. How is a Category III AIF taxed compared to Category I and II?

    Category III AIFs do NOT have full pass-through status; income is generally taxed at the fund level (Maximum Marginal Rate for trust-structured funds), not passed to investors.

20. What is the typical maximum tenure and extension allowed for a close-ended Category I or II AIF?

    Minimum tenure of 3 years; tenure may be extended up to 2 years subject to approval of two-thirds of unit holders by value.

21. What is a bond's coupon rate?

    The fixed annual interest rate stated on a bond, expressed as a percentage of its face (par) value, determining the periodic interest payments to the bondholder.

22. What is the relationship between a bond's price and prevailing market interest rates?

    Inverse relationship: when market interest rates rise, bond prices fall, and when rates fall, bond prices rise.

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