BCSM: BSE’s Certification on Securities Markets Interview Questions

The Bombay Stock Exchange’s Certification on Securities Market (BCSM) is one of the most important exams in India. The BCSM is recognized for its relevance as well as its difficulty. In order to pass the interview, and grab a job, you need to have a  comprehensive knowledge of the securities market, regulatory perspective, functioning of the stock exchange, and trading. Moreover, it is highly recommended to have direct exposure to relevant practices and business strategies that help better understand how organizations identify and respond to new market challenges. 

While you may be nervous going into the interview itself, planning ahead for the questions that will be asked can make it easier to deliver memorable answers that sell your skills. So below is a list of the top BCSM Interview questions for you. Let’s begin!

1. What do understand by primary and secondary markets?

The primary market is where securities are created, such as through IPOs (initial public offerings) or private placements. Whereas, the secondary market is simply the stock market referring to the New York Stock Exchange (NYSE), the NASDAQ, and other exchanges worldwide.

2. Can you elaborate on the secondary market and its function?

A secondary market is a space where people can buy and sell shares of different companies. Investors can trade shares among themselves without the help of the issuing companies. Income is generated when one investor buys shares from another person.

3. Can you explain the benefits of the secondary market?

The benefits of secondary market trading are that it offers investors to make good gains in a shorter period, while the stock price allows you to evaluate a company effectively. Secondary markets allow you to sell and buy your shares easily, providing liquidity.

4. Who are the main secondary market players?

Broker-dealers, corporations, and private individuals are all involved in the secondary market. Financial intermediaries like banks, nonbank financial institutions, and insurance companies are also major players as well as advisory services providers like commission stockbrokers.

5. Can you tell the risks in the secondary market?

Investors are attracted to the higher yields of secondary markets, but there is also concern that competition for this product will increase as capital flows toward these opportunities. Also, some investors are concerned that rising interest rates coupled with anticipated NOI growth in secondary-market properties could result in a decrease in expected yields.

6. Can you elaborate on the functions of the secondary market?

• Firstly, it can effectively determine  economic condition of a country
• Secondly, the Supply and demand forces can determine the price of securities.
• Thirdly, it provides a marketplace that is ready for liquidity. 
• It helps to educate people about investing, ensuring a better trading environment, and providing regulation for new share issues.
• Also, it ensures the investors with a haven for getting fair deals
• It gives marketability and liquidity to existing securities
• Then, the allocation of capital makes it easy to raise fresh capital. 
• Savings are channelized into investment avenues resulting in capital formation.
• Further, it offers scope for speculation
• Finally, it promotes the habit of investment and savings 

7. What are some of the major characteristics of the secondary market?

• First, IPO is offered for sale on the primary markets. Afterward, these shares are traded in secondary markets
• Second, the price of a stock share is determined by the demand and supply
• Brokers are hired by investors to handle their trades and investments for a fee
• Moreover, you can purchase as many shares as you’d like in the stock market
• In addition, proceeds from the sale go to the investors who are selling them.
• Last but not least, prices of shares fluctuate owing to changes in the market.

8. Can you explain trade clearing and settlement?

When you buy or sell a stock, you usually trade through a broker. The process of buying or selling stock is called settlement. Clearing and settlement are two parts of the same process. Clearing refers to updating the accounts of the trading parties and arranging for the transfer of money and securities. Settlement refers to the actual exchange of money, or some other value, for the securities.

9. How are trade settlements conducted?

On the stock market, there’s always a buyer and a seller. When you buy shares, someone else sells them to you. The trade is settled when the buyer receives the shares and the seller gets paid.

10. Is the selling of shares possible before settlement in any way?

For settling the outstanding balance on your account, you may either pay funds into your nominated bank account or sell sufficient shares to cover the amount you owe. However, if you fail to settle by the due date, you will be charged a late settlement fee.

11. What does the rolling segment mean to you?

In a rolling settlement system, the end of each day’s trading is considered a separate period, and the trades made during that day are settled based on their net value (debits or credits). Securities are settled on a trade-by-trade basis, meaning that no offsetting or netting of positions is permitted.

12. In rolling settlement, what does the T stand for?

The transaction day T is the day we refer to when we use T+2.

13. What do you know about BOLT?

The Bombay Stock Exchange has designed a two-tier architecture for its Online Trading System (BOLT). BOLT deploys an Online Trading system on March 14, 1995.

14. Mutual funds are what type of securities?

A mutual fund is a company that pools investors’ money, invests it in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments, and splits the profits among the investors.

15. Do mutual funds qualify as listed or unlisted securities?

Mutual funds, or MFs, are regulated by the Securities and Exchange Board of India (SEBI). SEBI-registered MFs are listed and can be traded in the capital market segment of the stock exchange.

16. Can you differentiate between securities and stocks?

Security is a financial instrument that has value and is traded. The most common types of securities are stocks, bonds, and derivatives. A stock is a piece of ownership, in a publicly-traded company. It represents ownership or equity.

17. Can you explain the process of dematerialization of shares?

Dematerialization refers to replacing your physical share certificates with digital or electronic ones. It will not only simplify the process of buying, selling, transferring, and holding shares but also make it cost-effective and foolproof.

18. What is the importance of the dematerialization of securities?

Dematerialization accounts are a safe and secure way to conduct transactions electronically. The risks associated with holding share certificates—such as theft, damage, and loss—are eliminated when shares are held on a dematerialization account.

19. Can you explain Nifty and Sensex?

Nifty and Sensex are the main indices, or benchmarks used to measure market performance. Nifty is calculated by the National Stock Exchange (NSX), and Sensex is calculated by the Bombay Stock Exchange (BSE).

20. What do you know about the futures and options?

Futures and options are types of contracts between two parties that allow trading in the share market while protecting each party against losses beyond a set threshold. They are derivative securities that you can trade through stockbrokers and are agreements between two parties for the future sale or purchase of securities at a price specified in the contract.

21. What do you know about the primary market and its components?

Another prominent term for the primary market is the new-issue market. In this market basically, securities are sold for the first time, i.e., new securities are issued from the company. The most commonly-issued securities include equity shares, debentures, bonds, preference shares, and other innovative securities.

22. Can you tell the advantages of a primary market?

Companies can raise capital at low costs in the primary market, which means they can also sell their securities immediately in the secondary market. This increases liquidity, which reduces the risk for investors because it gives them more options to diversify their portfolios.

23. Does the primary market outperform the secondary market?

In any economy, the two financial markets—primary and secondary—play a major role in the mobilization of money. The primary market is where companies directly interact with investors. The secondary market, however, is maintained by brokers who help investors buy and sell stocks.

24. How would you explain book building and its benefits?

Book building is a process by which investment bankers help companies determine the offering price of their stock when they issue an IPO. This method is recommended by major stock exchanges and regulators to ensure that the pricing mechanism is fair for all investors.

25. Do you know what happens during an IPO?

When a company goes public, its owners sell a portion of the company to the general public. This usually happens through an underwriting process that is similar to a pyramid scheme. The company negotiates an agreement with one or more investment banks that act as the underwriter for its initial public offering (IPO).

26. Can you tell the steps involved with an initial public offering?

The IPO process steps are:

• Firstly, hiring an underwriter or investment bank
• Second, registration for IPO
• Verification by SEBI
• Then, preparing an application to the stock exchange
• Creating a buzz by roadshows
• Subsequently, pricing of IPO
• Finally, allotment of shares

27. Do you know where the IPO money goes?

Companies that offer their securities for sale directly to the general public through an initial public offering (IPO) receive some of the money from the investing public as part of the IPO. Moreover, early private investors can also sell all or a portion of their holdings in the IPO.

28. Can you tell the available resources to the investor for redressing his grievances?

Stock exchanges have established Investor Services to help investors who have complaints. Investors can complain to the following agencies:

• Grievance cells in stock exchanges.
• SEBI.
• Company Law Board.
• Courts.
• Press.

29. Can you explain how SEBI helps investors remove their grievances?

To the credit of India’s capital markets, the Securities and Exchange Board of India (SEBI) takes up investor grievances seriously. It stresses the need for immediate corrective action by the companies involved. For example, meetings may be held with company officials to impress upon them the need for immediate action.

30. Do you know the largest investors in the securities market?

India’s debt market is thriving, and there are many players involved. Banks, financial institutions, insurance companies, foreign investors, and mutual funds all have a place in the market. Debt instruments can be categorized as those issued by corporations, banks or other financial institutions, state/central governments.