Chapter 10: Code of Conduct and Investor Protection Measure

SEBI’s Code of Conduct for Brokers: General: Maintain high standards of integrity, promptitude, and fairness in all business dealings. Act with due skill, care, and diligence. Avoid manipulative, fraudulent, or deceptive transactions or spreading rumors. Do not create false markets or engage in acts detrimental to investors’ interests or market functioning. Comply with all statutory […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.

Chapter 9: Accounting and Taxation

Accounting Guideline and Disclosure Requirements: RBI Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019 specifies that accounting, valuation, and capital requirements for OTC and exchange-traded interest rate derivatives should follow applicable accounting standards and valuation methods prescribed by ICAI or other standard-setting organizations or as specified by regulators. ICAI has issued guidance notes on Accounting […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.

Chapter 8: Regulatory Framework for Exchange Traded Interest Rate Derivatives

Statutory Regulations and Operational Rules for Exchange Traded Interest Rate Derivatives: Entity Authority/Statute Scope RBI Government Securities Act 2006 All dealings in government securities   RBI Act 1934; Banking Regulation Act 1949 All dealings by RBI-supervised entities; Dealing in rupee interest rate derivatives SEBI Securities Contract (Regulation) Act 1956; SEBI Act 1992 All exchange-traded contracts […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.

Chapter 7: Clearing, Settlement, and Risk Management in Exchange-Traded Interest Rate Derivatives

Introduction: Clearing Corporation registered with SEBI is responsible for clearing and settlement of all trades in Exchange Traded Interest Rate Derivatives. Clearing Corporation acts as a legal counterparty and guarantees financial settlement in the Currency Derivatives Segment. Clearing and Settlement process involves Clearing, Settlement, and Risk Management activities. Clearing Members and Clearing Banks assist Clearing […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.

Chapter 6: Trading Mechanism in Exchange-Traded Interest Rate Derivatives

Introduction: Stock exchanges provide a platform for buyers and sellers to trade securities. Different segments of the stock exchanges include equity, equity derivatives, currency derivatives, commodity derivatives, interest rate derivatives, and debt securities. Trading and settlement are conducted by two entities: the exchange and the clearing corporation. Entities in the Trading System: Stock Exchange Incorporated […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.

Chapter 5: Strategies Using Exchange Traded Interest Rate Derivatives

Market Participants in Exchange Traded Interest Rate Derivatives (ETIRD) Market: Hedgers: Objective: Protect themselves from the risk involved in price movements of underlying interest rates or interest rate instruments. Real exposure to interest rate risk due to their underlying business. Use ETIRD to remove interest rate risk. Example: Bond investors who want to hedge against […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.

Chapter 4: Exchange Traded Interest Rate Options

Basics of Options Term Definition Option A contract that gives the option buyer the right, but not the obligation, to buy or sell the underlying asset at a specific price on or before a certain date. Call Option The right to buy the underlying asset. Put Option The right to sell the underlying asset. Strike […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.

Chapter 3: Exchange Traded Interest Rate Futures

Introduction: Futures contracts are agreements made through an organized exchange to buy or sell a fixed amount of a commodity or financial asset on a future date at an agreed price. Futures contracts are standardized forward contracts traded on an exchange, and the clearing corporation guarantees settlement. Buyers take long positions, and sellers take short […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.

Chapter 2: Interest Rate Derivatives

Derivatives: Definition and Economic Role Definition of Derivatives: Derivatives are financial instruments that are derived from an underlying asset. The underlying asset is independent, and the derivative depends on and is derived from the underlying. Derivatives cannot exist without the underlying asset. Examples of derivatives include futures, options, swaps, and forwards. Derivative prices are determined […]

To access this post, you must purchase NISM Series IV: Interest Rates Derivatives Certification Examination or NISM Series-XIII: Common Derivatives Certification Examination.