1. Basics of Derivatives

  • Introduction to derivatives
  • History and evolution of derivatives market
  • Factors influencing the growth of derivatives market
  • History of Indian derivatives Market and available derivative products in India
  • Market participants and their roles in the derivatives markets
  • OTC and Exchange Traded Market
  • Significance and economic purpose of derivatives
  • Risks associated with financial derivatives

2. Introduction to the Underlying Markets

  • Introduction to Equity Markets and Equity Indices
  • Introduction to Currency Markets
  • Introduction to Fixed-income Securities
  • Introduction to “Interest Rate” concept and yield curve
  • Return and Risk Measures for Debt Securities (Current yield, YTM, Duration, PVBP, Convexity, etc.)

3. Introduction to Forwards and Futures

  • Introduction to Forwards and futures contracts
  • Forwards and Futures on Equities
  • Payoff Charts for Futures contract
  • Futures pricing
  • Basic differences in Commodity, Equity and Index Futures
  • Exchange Traded Currency Futures
  • Concept of Interest rate parity and pricing of currency futures
  • Interest Rate Futures

4. Strategies Using Futures

  • Strategies using Equity Futures
  • Strategies for hedging, speculation and arbitrage in futures market
  • Strategies Using Currency Futures
  • Strategies Using Interest Rate Futures

5. Introduction to Options – Options on Equities and Currencies

  • Basics of options
  • Concept of option premium
  • Call and Put option
  • Buying and selling (writing) options
  • European vs. American option
  • Moneyness of an option
  • Binomial and Black-Scholes option pricing models and option Greeks
  • Payoff charts for options
  • Uses of Options

6. Option Trading Strategies – Strategies using Equity Options and Currency options

  • Option spreads and their payoff charts
  • Straddle: market view and payoff charts
  • Strangle: market view and payoff charts
  • Covered Call: market view and payoff charts
  • Protective Put: market view and payoff charts
  • Collar: market view and payoff charts
  • Butterfly spread: market view and payoff charts

7. Introduction to Trading, Clearing, Settlement & Risk Management

  • Introduction to Trading Systems
  • Clearing Mechanism and computation of open positions
  • Settlement Mechanism for futures and options contracts
  • Margining and mark to market (MTM) under SPAN
  • Risk Management features, position limits and net worth requirements
  • Margin collection process of Clearing Corporations and delivery procedure

8. Legal and Regulatory Environment

  • Provisions of Securities Contract (Regulation) Act, 1956
  • Role of SEBI in regulating Derivatives market and SEBI Act, 1992
  • Important rules and regulations on trading in Derivatives market
  • Regulations in clearing & settlement and risk management
  • Outline major recommendations of the L C Gupta Committee
  • Outline major recommendations of the J R Verma Committee
  • RBI-SEBI Standing Technical Committee on Exchange Traded Currency and Interest Rate Derivatives
  • Provisions of Foreign Exchange Management Act, 1999
  • Salient features of RBI notification ‘Currency Futures (Reserve Bank) Directions, 2008
  • Features of RBI Circular ‘Guidelines on trading of Currency Futures in Recognized Stock / New Exchanges’
  • Salient features of SEBI Regulations for Currency Derivatives Exchanges
  • Explain the role of various regulators in Bond and Interest Rate Derivatives Market
  • Regulatory reporting requirements for Interest Rate Derivatives Markets
  • Role of FIMMDA in fixed income and derivatives markets in India 

9. Accounting and Taxation

  • Accounting treatment for derivative contracts
  • Taxation of derivative transaction in securities

10. Sales Practices, Code of Conduct and Investor Protection Measures

  • Basic features of SEBI Codes of Conduct for Brokers and Sub-Brokers
  • Importance of risk profiling of clients in sales process
  • Importance of KYC and required documentation for investors to trade in Derivatives contract
  • Best practices in derivatives sales
  • Grievance redressal mechanism available to the investors
  • Nature of complaints considered by exchanges
  • Arbitration mechanism at exchanges