CRISIL Certified Analyst Programme (CCAP)
Introduction NISM-Series-I: Currency Derivatives Certification Examination (NISM-Series-I: CD Examination) Objective of the Examination The examination seeks to create a common minimum knowledge benchmark for persons working in the Currency Derivatives Segments, in order to enable a better understanding of currency markets and exchange traded currency future of Stock Exchanges products, better quality investor service, operational process efficiency and risk controls. It seeks to ensure a basic understanding of the various aspects of the Currency Futures products, the process flow involved in trading, clearing and settlement of these products and the regulatory environment under which the market operates. The standard of the examination will be that applicable to a member of staff who is entering the currency derivatives market. The measurement purpose of the examination is to determine whether or not a candidate has attained a minimum level of competency/ proficiency required to participate in the market. On successful completion of the examination the candidate should: • Know the basics of currency markets and specifically Exchange Traded Currency Futures markets. • Understand the trading, clearing and settlement mechanisms related to Currency Futures markets and basic investment strategies that use currency futures products. • Know the regulatory environment in which the Currency Futures markets operate in India. Functional Coverage The examination will be mandatory for approved users and sales personnel of all Trading Members of the Currency Derivative segment of recognised Stock Exchanges. Examination Specifications This is a computer-based examination with multiple choice questions. The Examination will consist of 60 questions (30 questions of 1 mark each, 20 questions of 2 marks each and 10 questions of 3 marks each) adding to 100 marks.. The examination should be completed in 2 hours. There shall be negative marking of 25% of the marks assigned to a question. The passing score for the examination will be 60 marks. NATIONAL INSTITUTE OF SECURITIES MARKETS Established by the Securities and Exchange Board of India NISM-Series-I: Currency Derivatives Certification Examination (NISM-Series-I: CD Examination) Page 2 of 3 NISM-Series-I: Currency Derivatives Certification Examination (NISM-Series-I: CD Examination) Syllabus Outline with Weightages Unit 1 Introduction to Currency Markets 5% 1.1 Basic Foreign Exchange Definitions 1.2 Exchange Rate Mechanism 1.3 Major Currencies of the World 1.4 Overview of International Currency Markets 1.5 Economic Variables Impacting Exchange Rate Movements Unit 2 Foreign Exchange Derivatives 7% 2.1 Derivatives - Definition 2.2 Derivative Products 2.3 Growth Drivers of Derivatives 2.4 Market Players 2.5 Key Economic Function of Derivatives 2.6 Exchange-Traded Vs. Over –the- Counter Derivatives Unit 3 Exchange Traded Currency Futures 8% 3.1 Currency Futures -Definition 3.2 Futures Terminology 3.3 Rationale behind Currency Futures 3.4 Distinction between Futures and Forward Contracts 3.5 Interest Rate Parity and Pricing of Currency Futures Unit 4 Strategies Using Currency Futures 30% 4.1 Speculation in Futures Markets 4.2 Long Position in Futures 4.3 Short Position in Futures 4.4 Hedging Using Currency Futures 4.5 Trading Spreads Using Currency Futures 4.6 Arbitrage Unit 5 Trading 15% 5.1 Currency Futures Contract Specification 5.2 Trading Parameters 5.3 Tenors of Futures Contract 5.4 Trader Workstation Screen (TWS) 5.5 Entities in the Trading System 5.6 Types of Orders 5.7 Mark-to-Market 5.8 Position Limits Unit 6 Clearing, Settlement and Risk Management 15% 6.1 Clearing Entities 6.2 Clearing Mechanism 6.3 Settlement Mechanism 6.4 Risk Management Measures 6.5 Margin Requirements Unit 7 Regulatory Framework for Currency Derivatives 8% 7.1 Securities Contracts (Regulation) Act, 1956 [SC(R)A] 7.2 Securities and Exchange Board of India Act, 1992 7.3 RBI-SEBI Standing Technical Committee on Exchange Traded Currency and Interest Rate Derivatives NATIONAL INSTITUTE OF SECURITIES MARKETS Established by the Securities and Exchange Board of India NISM-Series-I: Currency Derivatives Certification Examination (NISM-Series-I: CD Examination) Page 3 of 3 7.4 Foreign Exchange Management Act, 1999 - Provisions 7.5 Regulatory Framework for Exchanges 7.6 Regulatory Framework for Clearing Corporations 7.7 Governing Council of the Exchange and Clearing Corporation 7.8 Eligibility Criteria for Members Unit 8 Accounting And Taxation 8% 8.1 Accounting 8.2 Taxation of Derivative Transaction in Securities Unit 9 Codes of Conduct And Investor Protection Measures 4% 9.1 Adherence to SEBI Codes of Conduct for Brokers/ Sub-Brokers 9.2 Adherence to Codes of Conduct Specific to ETCF Segment 9.3 Grievance Redressal Mechanism for Investors