Current Affairs · Capital Market Regulations
Regarding the regulatory framework for credit facilities extended to Capital Market Intermediaries (CMIs), which of the following best describes the conceptual restrictions and permitted exceptions concerning the financing of proprietary trading activities?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Financing for proprietary trading and proprietary investments is generally prohibited unless the exposure is fully secured, with guarantees for such activities requiring at least 50% cash or fixed deposits as collateral.✓
- 2Financial assistance for proprietary trading is permissible only for entities with a minimum net worth of ₹500 crore and is strictly capped at 75% of the total value of the underlying financial instruments.
- 3Credit facilities for proprietary trading are automatically permitted for all regulated intermediaries provided the total exposure remains within the 20% direct investment ceiling of the bank's eligible capital base.
- 4Banks are entirely barred from extending any form of fund-based or non-fund-based credit facilities for the purpose of proprietary trading to ensure that leveraged bank funds are not utilized for market-making activities.
Correct answer
Financing for proprietary trading and proprietary investments is generally prohibited unless the exposure is fully secured, with guarantees for such activities requiring at least 50% cash or fixed deposits as collateral.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Current Affairs?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Capital Market Regulations MCQs →Want more practice questions on Capital Market Regulations?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Current Affairs · Capital Market Regulations