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Derivatives Market (Dealers) Module

CURRICULUM
1. 2. Introduction to derivatives Definition, Products Participants and functions (Types of members to be included) Types of derivatives Exchange-traded vs. T! derivatives mar"ets. Derivatives mar"et at #$E (including turnover) (7 Marks)

Market Index: Marks) %nderstanding the index number &ndex construction Desirable attributes of an &ndex Types of indexes The $'P !#( #ifty (&ntroduction, components) )pplications of &ndex Introduction to !utures and o"tions *or+ard contracts ,imitations of for+ard mar"ets &ntroduction to futures Distinction bet+een futures and for+ards contracts *utures terminology &ntroduction to options ption terminology Distinction bet+een *utures and options &ndex derivatives

(8

(1# Marks)

$.

%""lication o! &utures ' ("tions (1# Marks) Payoff for derivatives contracts (futures and options) Difference bet+een trading securities and trading futures on individual securities %se of *utures ( nly simple strategies of hedging, speculation and arbitrage) o &ndex futures o $toc" futures %se of ptions ( nly simple strategies of hedging, speculation and arbitrage) o &ndex options o $toc" options (2)

).

*radin+ Marks)

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*utures and options trading system Entities in the trading system .asis of trading !orporate hierarchy

,.

rder types and conditions The trader +or"station The mar"et +atch +indo+ &n/uiry +indo+ Placing orders on the trading system 0ar"et spread1 combination order entry .as"et trading *utures and options mar"et instruments (include interest rate futures) !ontract specifications for index futures !ontract specification for index options !ontract specifications for stoc" futures !ontract specifications for stoc" options !ontract cycle Eligibility of stoc"s for futures and option trading Determination of mar"et lot 2uantity free3e !harges

Clearin+ and settle-ent Marks) !learing entities !learing members !learing ban"s !learing mechanism $ettlement mechanism $ettlement of futures contracts $ettlement of options contracts $pecial facility for settlement of institutional deals 4is" 0anagement $ystems (5olatility, types of margins ' $P)#) )d6ustments for corporate actions Re+ulator. !ra-e/ork Marks) $ecurities !ontracts(4egulation) )ct $ecurities and Exchange .oard of &ndia )ct, -778

(2)

7.

(1)

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4egulation for derivatives trading ,.! 9upta committee 4eport :.4 5arma committee report 4ules, 4egulations and .yela+s of #$E&, 4ules, 4egulations and .yela+s of #$!!, )ccounting and Taxation issues