NISM-8 (Certificate In Equity Derivatives)

The NISM Series VIII: Equity Derivatives Certification Examination is a comprehensive course designed to equip individuals with the knowledge and skills required to understand and operate within the equity derivatives market in India. This certification, mandated by SEBI for professionals in the securities market, is essential for those involved in trading, broking, investment advisory, and portfolio management.

The course covers a wide range of topics including the fundamentals of derivatives, types of derivative instruments, trading strategies, and the regulatory framework governing equity derivatives in India. Participants will gain a thorough understanding of key concepts such as futures and options, pricing models, risk management, and the use of derivatives in hedging and speculation.

Through detailed case studies and practical examples, this course helps bridge the gap between theoretical knowledge and real-world application, ensuring that participants are prepared to not only pass the NISM VIII exam but also to thrive in the dynamic derivatives market.

Who is this course for?

This course is ideal for professionals working in the financial and securities markets, including brokers, dealers, and investment advisors. It is also suited for students pursuing careers in finance who want to build a strong foundation in equity derivatives, as well as investors looking to enhance their understanding of derivative products to make informed investment decisions.

By the end of the course, participants will be well-versed in the structure and functioning of equity derivatives, enabling them to apply this knowledge in a professional setting and comply with regulatory requirements.

Is This Course Certified?

Yes, upon successful course completion, you are eligible for two certifications:

1. A certificate from FPA Edutech after passing two tests with scores of 70% or above.
2. A certificate from NISM after registering and passing the NISM certification exam.

• Curriculum

Course Structure

I: BASICS OF DERIVATIVES

1. Basics of derivatives
2. Evolution of derivatives
3. Indian derivatives market
4. Market participants
5. Types of derivatives market
6. Significance of derivatives
7. Various risks faced by participants in derivatives

II: UNDERSTANDING INDEX

1. Introduction to index
2. Significance and economic purpose
3. Types of indices
4. Attributes of an index and concept of impact cost
5. Index management
6. Major indices in India
7. Applications of index

III: INTRODUCTION TO FORWARD

1. Introduction to forwards
2. Payoff charts for futures contract
3. Futures pricing
4. Cash and carry / non-arbitrage model for futures pricing
5. Expectancy model of futures pricing
6. Concept of convergence of cash and futures prices
7. Basic differences in commodity, equity
8. Uses of futures
9. Role of different players in futures market
10. Use of futures contract as an effective instrument for managing
11. Strategies for hedging, speculation and arbitrage in futures market

IV: INTRODUCTION TO OPTIONS

1. Basics of options
2. Payoff charts for options
3. Basics of options pricing and option greeks
4. Fundamentals of options pricing
5. Overview of binomial model
6. Basics of option greeks
7. Uses of options

V: OPTION TRADING STRATEGIES

1. Option spreads and their payoff charts
2. Straddle: market view and payoff charts
3. Strangle: market view and payoff charts
4. Covered call: market view and payoff charts
5. Protective put: market view and payoff charts
6. Collar: market view and payoff charts
7. Butterfly spread: market view and payoff charts

VI: INTRODUCTION TO TRADING SYSTEMS

1. Trading systems, corporate hierarchy, order types and conditions
2. Selection criteria of stock for trading
3. Selection criteria of index for trading
4. Adjustments for corporate actions
5. Position limits
6. Using daily newspapers to track futures and options

VII: INTRODUCTION TO CLEARING

1. Clearing members, their role and responsibilities
2. Clearing mechanism and computation of open positions
3. Settlement mechanism for stock and index futures and options
4. Understanding margining and mark to market under span
5. Risk management features and position limits

VIII: LEGAL AND REGULATORY ENVIRONMENT

1. Securities contract (regulation) act, 1956
2. Securities and exchange board of india act, 1992
3. Important rules and regulations
4. Regulation in clearing and settlement
5. Major recommendations of regulatory committees
6. Major recommendations of the j r verma committee

IX: ACCOUNTING AND TAXATION

1. Accounting of futures and options contracts
2. Taxation of derivative transactions in securities

X: SALES PRACTICES AND INVESTOR PROTECTION SERVICES

1. Risk profile of investors
2. Importance of profiling clients in sales process
3. Importance of kyc
4. Documents required by the investors to trade in derivatives contract
5. Best practices in derivatives sales
6. Investors grievance mechanism