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NISM-Series-I: Currency Derivatives Certification Examination

Curriculum

I. Introduction to Currency Markets
  1. A. Brief History of Foreign Exchange Markets
  2. B. Major Currencies and Currency Pairs
  3. C. Basics of Currency Markets and Peculiarities in India
  4. D. Exchange Rate Arithmetic – Cross Rate
  5. E. Impact of Economic Factors on Currency Prices
  6. F. Economic Indicators

 

II. Foreign Exchange Derivatives
  1. A. Derivatives – Definition
  2. B. Key Economic Functions of Derivatives
  3. C. Derivative Products
  4. D. Growth Drivers of Derivatives
  5. E. Market Participants in Currency Derivatives Market
  6. F. Exchange-Traded Derivatives vs. OTC Derivatives
  7. G. Rationale for Introducing Exchange Traded Currency Derivatives in India

 

III. Exchange Traded Currency Futures
  1. A. Currency Futures – Definition
  2. B. Pay off Charts of Futures Contract
  3. C. Contract Specification of Exchange Traded Currency Futures Contracts
  4. D. Contract Value
  5. E. Advantages and Limitations of Future Contracts in Comparison to Forward
  6. F. Interest Rate Parity and Pricing of Currency Futures

 

IV. Exchange Traded Currency Options
  1. A. Basics of Options
  2. B. Difference between Futures and Options
  3. C. Style of Options
  4. D. Moneyness of an Option
  5. E. Basics of Option Pricing and Options Greeks
  6. F. Option Pricing Methodology
  7. G. Implied Volatility (IV)
  8. H. Pay off Diagrams for Options
  9. I. Contract Specification of Exchange-Traded Currency Options
  10. J. Comparison of Exchange-Traded Currency Options and OTC Currency Options

 

V. Strategies Using Exchange Traded Currency Derivatives
  1. A. Market Participants
  2. B. Hedging Through Exchange-Traded Currency Derivatives
  3. C. Option Trading Strategies
  4. D. Use of Currency Derivatives by Speculators
  5. E. Use of Currency Derivatives by Arbitragers
  6. F. Trading Spreads Using ETCD
  7. G. Limitations of Exchange-Traded Currency Derivatives for Hedgers

 

VI. Trading Mechanism in Exchange Traded Currency Derivatives
  1. A. List of Entities in Trading System
  2. B. Exchange Trading System
  3. C. Order Management
  4. D. Risk Management and Order Routing
  5. E. Price Limit Circuit Filter
  6. F. Trading Cost

 

VII. Clearing, Settlement and Risk Management in Exchange Traded Currency Derivatives
  1. A. Clearing and Settlement Mechanism
  2. B. List of Entities in Clearing and Settlement of ETCD
  3. C. Interoperability of Clearing Corporation
  4. D. Clearing Mechanism
  5. E. Determination of Settlement Obligations
  6. F. Position Limits
  7. G. Settlement
  8. H. Funds Settlement
  9. I. Risk Management
  10. J. Margin Collection by Clearing Corporation
  11. K. Core Settlement Guarantee Fund
  12. L. Cyber Security & Cyber Resilience framework (CSCRF) for Stock Brokers / Depository Participants

 

VIII. Regulatory Framework for Exchange Traded Currency Derivatives
  1. A. Securities Contracts (Regulation) Act, 1956 [SC(R)A]
  2. B. RBI-SEBI Standing Technical Committee on Exchange Traded Currency and Interest Rate Derivatives
  3. C. Foreign Exchange Management Act, 1999
  4. D. SEBI Regulation and Guideline
  5. E. RBI Regulation and Guideline
  6. F. Regulatory Guidelines on Participation of Various Entities in ETCD
  7. G. Eligibility Criteria for Members

 

IX. Accounting and Taxation
  1. A. Accounting Guideline and Disclosure Requirements
  2. B. Taxation of Exchange Traded Currency Derivatives

 

X. Code of Conduct and Investor Protection Measures
  1. A. SEBI’s Code of Conduct for Brokers
  2. B. Investor Grievance
  3. C. Handling of Investor’s claims / complaints in case of default of a Trading Member / Clearing Member (TM/CM)
  4. D. Investor Protection Fund
  5. E. Execution of Power of Attorney (PoA) by the Client in favour of the Stock Broker / Stock Broker and Depository Participant
  6. F. Risk Disclosure to Client and KYC
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