The distributor's code
How a distributor must behave
This chapter matters most to you, because you are the distributor. The code is short and the exam tests it directly: investor first, disclose everything, promise nothing.
Conduct rules follow the AMFI code and SEBI norms, as amended. Education for the NISM Series V-A exam, not financial advice.
- 1
Recommend what suits the investor, not what pays you the most commission.
- 2
Disclose the commission you earn and any conflict of interest, plainly.
- 3
Give balanced information. Never guarantee returns, and never hide the risks.
- 4
Break the AMFI code and you can lose your ARN. Conduct is not optional, it is the licence.
A fund pays you more to sell it. The code says the investor's need comes first, even when a lower-paying fund is the right fit.
Two funds suit your client. One pays you double the commission. The tempting one is not always the right one.
Investor need beats your commissionYou tell the client what you earn and why you suggest this fund. Sunlight, not silence.
Disclose commission and conflictsYou never say 'this will surely give 15%'. You show the risk beside the reward.
No guarantees, no hidden riskInvestor first, disclose everything, promise nothing. That keeps your ARN.
Practice
🔥 0 streakReal exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.
A distributor should recommend a scheme based on:
A distributor must disclose:
Which of these breaks the code?
Serious misconduct by a distributor can lead to:
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Education for the exam, not financial advice. Answers can be wrong, so confirm figures against the workbook.