Frequently Asked Questions about NISM Common Derivatives Exam
What is the objective of this Common Derivatives Examination?
On successful completion of the NISM Series XIII: Common Derivatives Certification Examination, the candidate should:
- Know the basics of the Indian derivatives market (covering Equity Derivatives, Currency Derivatives, and Interest Rate Derivatives).
- Understand the various trading and hedging strategies that can be built using futures and options.
- Understand the clearing, settlement, and risk management as well as the operational mechanism related to the derivatives markets.
- Know the regulatory environment in which the derivatives markets operate in India.
Who can take NISM Series XIII: Common Derivatives Certification Examination?
NISM has launched the NISM Series XIII: Common Derivatives Certification Examination as an “additional choice” which the candidates may choose to take instead of appearing for the Currency Derivatives (Series-I), Interest Rate Derivatives (Series-IV), and NISM’s Equity Derivatives (Series VIII) examinations individually.
The following persons can take this exam:
- All approved users and sales personnel of trading members of currency derivatives, interest rate derivatives, and equity derivatives segments of recognized stock exchanges.
- Interested students and professionals.
- Any other individuals.
Where can I get NISM Common Derivatives Study Material ?
Click here for NISM Common Derivatives Short Notes
Where can I get NISM Common Derivatives Exam Dates ?
Click here for NISM Exam dates, location / centre & timeslots
How can I register for NISM-Series XIII: Common-Derivatives Certification Examination ?
NISM Registration - https://certifications.nism.ac.in/nismaol/Candidate/UserRegistration.aspx
Assessment Structure: Exam Pattern
DURATION |
3 hours |
NO. OF QUESTIONS |
150 |
MAXIMUM MARKS |
150 |
PASS MARK |
90 |
NEGATIVE MARK |
25% of that question for WRONG ANSWERS |
CERTIFICATE VALIDITY |
3 Years from the date of the examination. |
EXAM FEES |
Rs 3000/- |
Syllabus
Unit 1: Basics of Derivatives
- A. Introduction to derivatives
- B. History and evolution of derivatives market
- C. Factors influencing the growth of derivatives market
- D. History of Indian derivatives Market and available derivative products in India
- E. Market participants and their roles in the derivatives markets
- F. OTC and Exchange Traded Market
- G. Significance and economic purpose of derivatives
- H. Risks associated with financial derivatives
Unit 2: Introduction to the Underlying Markets
- A. Introduction to Equity Markets and Equity Indices
- B. Introduction to Currency Markets
- C. Introduction to Fixed-income Securities
- D. Introduction to “Interest Rate” concept and yield curve
- E. Return and Risk Measures for Debt Securities (Current yield, YTM, Duration, PVBP, Convexity, etc.)
Unit 3: Introduction to Forwards and Futures
- A. Introduction to Forwards and futures contracts
- B. Forwards and Futures on Equities
- C. Payoff Charts for Futures contract
- D. Futures pricing
- E. Basic differences in Commodity, Equity, and Index Futures
- F. Exchange Traded Currency Futures
- G. Concept of Interest rate parity and pricing of currency futures
- H. Interest Rate Futures
- I. Delivery aspects of IRD contracts including conversion factor, invoice amount, cheapest-to-deliver bond
Unit 4: Strategies Using Futures
- A. Strategies using Equity Futures
- B. Strategies for hedging, speculation, and arbitrage in futures market
- C. Strategies Using Currency Futures
- D. Strategies Using Interest Rate Futures
Unit 5: Introduction to Options – Options on Equities and Currencies
- A. Basics of options
- B. Concept of option premium
- C. Call and Put option
- D. Buying and selling (writing) options
- E. European vs. American option
- F. Moneyness of an option
- G. Binomial and Black-Scholes option pricing models and option Greeks
- H. Payoff charts for options
- I. Uses of Options
Unit 6: Option Trading Strategies – Strategies using Equity Options and Currency options
- A. Option spreads and their payoff charts
- B. Straddle: market view and payoff charts
- C. Strangle: market view and payoff charts
- D. Covered Call: market view and payoff charts
- E. Protective Put: market view and payoff charts
- F. Collar: market view and payoff charts
- G. Butterfly spread: market view and payoff charts
Unit 7: Introduction to Trading, Clearing, Settlement & Risk Management
- A. Introduction to Trading Systems
- B. Clearing Mechanism and computation of open positions
- C. Settlement Mechanism for futures and options contracts
- D. Margining and mark to market (MTM) under SPAN
- E. Risk Management features, position limits and net worth requirements
- F. Margin collection process of Clearing Corporations and delivery procedure
Unit 8: Legal and Regulatory Environment
- A. Provisions of Securities Contract (Regulation) Act, 1956
- B. Role of SEBI in regulating Derivatives market and SEBI Act, 1992
- C. Important rules and regulations on trading in Derivatives market
- D. Regulations in clearing & settlement and risk management
- E. Outline major recommendations of the L C Gupta Committee
- F. Outline major recommendations of the J R Verma Committee
- G. RBI-SEBI Standing Technical Committee on Exchange Traded Currency and Interest Rate Derivatives
- H. Provisions of Foreign Exchange Management Act, 1999
- I. Salient features of RBI notification ‘Currency Futures (Reserve Bank) Directions, 2008’
- J. Features of RBI Circular ‘Guidelines on trading of Currency Futures in Recognized Stock / New Exchanges’
- K. Salient features of SEBI Regulations for Currency Derivatives Exchanges
- L. Explain the role of various regulators in Bond and Interest Rate Derivatives Market
- M. Regulatory reporting requirements for Interest Rate Derivatives Markets
- N. Role of FIMMDA in fixed income and derivatives markets in India
Unit 9: Accounting and Taxation
- A. Accounting treatment for derivative contracts
- B. Taxation of derivative transaction in securities
Unit 10: Sales Practices, Code of Conduct and Investor Protection Measures
- A. Basic features of SEBI Codes of Conduct for Brokers and Sub-Brokers
- B. Importance of risk profiling of clients in sales process
- C. Importance of KYC and required documentation for investors to trade in Derivatives contract
- D. Best practices in derivatives sales
- E. Grievance redressal mechanism available to the investors
- F. Nature of complaints considered by exchanges
- G. Arbitration mechanism at exchanges