NISM-Series-I: Currency Derivatives Certification Examination

Published on March 28, 2024

The NISM-Series-I: Currency Derivatives Certification Examination aims at creating a common minimum expertise standard for all persons who are involved in trading equity derivatives in a recognized stock exchange.

Exam Pattern-NISM-Series-I: Currency Derivatives 



Test Duration (in Minutes)


No. of Questions


Maximum Marks


Pass Marks*(%)


Certificate Validity(in years)#


Assessment Structure:

  • The NISM-Series-VIII: Equity Derivatives Examination consists of 100 questions, each carrying 1 mark.
  • Participants have 2 hours to complete the examination.
  • There is negative marking (25% deduction) for incorrect answers.
  • The passing score is 60%.

Syllabus:-NISM-Series-I: Currency Derivatives 

I. Introduction to Currency Markets

  •  History of foreign exchange markets
  • Major currency pairs
  • Overview of international currency markets
  • Basics and Peculiarities of currency markets in India
  • Settlement or value date
  • Over-the-Counter (OTC) forward market
  • Exchange rate arithmetic- cross rate
  • Impact of market economics on currency prices
  • Economic indicators

II. Foreign Exchange Derivatives

  •  Evolution of derivatives
  • Derivative products and features
  • Growth drivers of derivatives
  • Market players in the foreign exchange market
  • Key economic functions of derivatives
  • Exchange-Traded Vs. OTC derivatives

III. Exchange Traded Currency Futures

  • Currency futures
  • Spot price
  • Futures price
  • Contract cycle
  • Value date/Final settlement date
  • Expiry date
  • Contract size
  • Initial margin
  • Marking-to-market
  • Rationale behind currency futures
  • Standard items in a futures contract
  • Introduction of currency futures in India
  • Futures and forward contracts
  • Advantages of futures contracts
  • Limitations of futures contracts
  • Interest rate parity and pricing of currency futures

IV. Strategies Using Currency Futures

  • Role of speculation in futures markets
  • Long position in futures
  • Short position in futures
  • Hedging using currency futures
  • Types of hedgers
  • Size of the hedging position
  • Trading spreads using currency futures
  • Concept of arbitrage
  • Use of arbitrage in currency futures markets
  • Arbitrage opportunities under various conditions

V. Trading in Currency Futures

  • Contract specification for currency futures
  • Trading parameters
  • Tenors of futures contract
  • Expiry date
  • Settlement price
  • Entities in the trading system
  • Types of orders
  • Concept of Mark-to-Market (MTM)
  • Position limits
  • Allowable open position limits for members trading in currency futures
  • Monitoring and enforcement of position limits in the currency futures market
  • Surveillance systems and procedures of exchanges

VI. Clearing, Settlement and Risk Management in Currency Futures

  • Clearing entities
  • Clearing mechanism
  • Open positions and obligations of clearing members
  • Settlement mechanism
  • MTM settlement
  • Final settlement
  • Risk management measures
  • Concept of margin requirements
  • Initial margin
  • Portfolio based margin
  • Calendar spread margin
  • Extreme loss margin
  • Liquid net worth
  • Liquid assets
  • Real time computation
  • Process of margin collection by Clearing Corporations

VII. Exchange Traded Currency Options

  • Options
  • Call and put option
  • Bought and sold option
  • Option premium
  • Futures and options
  • European vs. American option
  • Moneyness of an option
  • Option pricing and option Greeks
  • Option pricing methodology
  • Black-Scholes model
  • Binomial pricing model
  • Option pay offs
  • Option strategies
  • Practical application of currency options
  • Clearing, settlement and risk management for currency options
  • Initial margin
  • Extreme loss margin
  • Net option value
  • Calendar margin

VIII. Accounting and Taxation

  • Accounting treatment for derivative contracts
  • Taxation of derivative transaction in securities
  • Tax treatment of profit/loss on derivative transaction in securities

IX. Regulatory Framework for Currency Derivatives

  • Features of Securities Contracts (Regulation) Act, 1956 [SC(R)A]
  • Features of Securities and Exchange Board of India Act, 1992
  • Recommendations of the 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
  • Salient features of RBI Circular, ‘Guidelines on trading of Currency Futures in Recognised Stock / New Exchanges’
  • G. Salient features of SEBI Regulations for Currency Derivatives Exchanges
  • Regulatory framework for clearing corporations
  • Governing Council of the Exchange and Clearing Corporation
  • Eligibility criteria for membership of currency derivatives exchanges

X. Codes of Conduct and Investor Protection Measures

  • Features of SEBI Codes of Conduct for brokers
  • Features of SEBI Codes of Conduct for sub-Brokers
  • Features of Codes of Conduct specific to Exchange Traded Currency Derivatives Segment
  • Grievance redressal mechanism for investors
  • Nature of complaints considered by exchanges
  • Arbitration mechanism at exchanges
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