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


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.)


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


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


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


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


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


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


9. Accounting and Taxation

A. Accounting treatment for derivative contracts

B. Taxation of derivative transaction in securities


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

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