Examination Overview - NISM Series XIII: Common Derivative Certification Mock Test
The
NISM Series XIII: Common Derivatives Certification Examination is a mandatory certification introduced by the
National Institute of Securities Markets (NISM) to establish a
minimum knowledge benchmark for approved users and sales personnel of trading members operating in the
Equity Derivatives,
Currency Derivatives, and
Interest Rate Derivatives segments of recognized stock exchanges.
This exam is especially important today as mutual fund distributors must now clear it to be eligible to distribute Specialised Investment Funds (SIFs). Successful candidates become eligible to act as approved users or sales representatives in derivative trading roles, making it a vital step for professionals in India’s capital markets.
The examination provides a comprehensive understanding of exchange-traded derivative products, including their market structure, regulatory framework, associated risks, and clearing and settlement mechanisms. It also covers critical topics related to the Indian financial system and securities market regulations, particularly those governing exchange-traded derivatives.
This certification effectively combines the core knowledge areas of three separate NISM modules — Currency Derivatives, Interest Rate Derivatives, and Equity Derivatives — into one unified exam, offering a broad yet focused qualification for capital market professionals.
Examination Objectives
On successful completion of Common Derivative Certification Mock Test, the candidate should:
Know the basics of the Indian derivatives market (covering Equity Derivatives, Currency Derivatives and Interest Rate Derivatives).
Understand the various trading and hedging strategies that can be built using futures and options.
Understand the clearing, settlement and risk management as well as the operational mechanism related to the derivatives markets.
Know the regulatory environment in which the derivatives markets operate in India
For more details, please visit the official website of
NISM.
Assessment Structure
| Component |
Details |
| Mode of Exam |
Online (Computer-Based Test) |
| Language Options |
English |
| Number of Questions |
150 |
| Type of Questions |
Multiple Choice Questions (MCQs) |
| Total Marks |
150 |
| Marks per Question |
1 mark |
| Passing Criteria |
60% (You need at least 90 correct answers) |
| Negative Marking |
25% of the marks assigned to the question |
| Exam Duration |
3 Hours (180 Minutes) |
| Exam Fee |
Rs. 3,000 (inclusive of GST) + payment gateway charges extra |
| Result Declaration |
Immediately after exam completion |
| Certificate Validity |
3 Years from the date of passing |
| PAN Requirement |
PAN must be updated in your profile to apply |
| Exam Delivery Modes |
At 150+ NISM test centers across India |
Syllabus Outline – Common Derivatives Certification Examination
| Module |
Topics Covered |
| 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
- OTC and Exchange Traded Market
- Significance and economic purpose of derivatives
- Risks associated with financial derivatives
|
| 2. Introduction to the Underlying Markets |
- Equity Markets and Equity Indices
- Currency Markets
- Fixed-income Securities
- Interest Rate concept and yield curve
- Return and Risk Measures for Debt Securities
|
| 3. Introduction to Forwards and Futures |
- Forwards and Futures contracts
- Forwards and Futures on Equities
- Payoff Charts for Futures
- Futures pricing
- Differences in Commodity, Equity and Index Futures
- Exchange Traded Currency Futures
- Interest rate parity and pricing of currency futures
- Interest Rate Futures
- Delivery aspects of IRD contracts
|
| 4. Strategies Using Futures |
- Equity Futures strategies
- Hedging, speculation and arbitrage
- Currency Futures strategies
- Interest Rate Futures strategies
|
| 5. Introduction to Options |
- Basics of options
- Option premium
- Call and Put options
- Buying and selling (writing) options
- European vs. American options
- Moneyness of an option
- Option pricing models (Binomial & Black-Scholes) and Greeks
- Payoff charts
- Uses of Options
|
| 6. Option Trading Strategies |
- Option spreads and payoff charts
- Straddle
- Strangle
- Covered Call
- Protective Put
- Collar
- Butterfly spread
|
| 7. Trading, Clearing, Settlement & Risk Management |
- Trading Systems
- Clearing Mechanism and open position computation
- Settlement Mechanism
- Margining and MTM (SPAN)
- Risk Management features, position limits, net worth requirements
- Margin collection and delivery procedures
|
| 8. Legal and Regulatory Environment |
- Securities Contract (Regulation) Act, 1956
- SEBI Act, 1992 and SEBI’s role
- Regulations on derivatives trading
- Clearing, settlement & risk management regulations
- L C Gupta Committee recommendations
- J R Verma Committee recommendations
- RBI-SEBI Standing Committee
- FEMA, 1999 provisions
- RBI Currency Futures Directions, 2008
- RBI Circular on Currency Futures
- SEBI Regulations for Currency Derivatives Exchanges
- Role of regulators in Bond and Interest Rate Derivatives
- Regulatory reporting for IRD
- Role of FIMMDA
|
| 9. Accounting and Taxation |
- Accounting for derivative contracts
- Taxation of derivative transactions
|
| 10. Sales Practices, Code of Conduct & Investor Protection |
- SEBI Codes of Conduct for Brokers/Sub-Brokers
- Risk profiling of clients
- KYC requirements
- Best practices in derivatives sales
- Grievance redressal mechanisms
- Common types of complaints
- Arbitration mechanisms at exchanges
|
Prepare for the NISM Common Derivatives Exam – 3-in-1 Combo Offer
The NISM Common Derivatives Certification Exam is a combined module that covers three important subjects:
- NISM Series I – Currency Derivatives
- NISM Series IV – Interest Rate Derivatives
- NISM Series VIII – Equity Derivatives
This certification is mandatory for professionals looking to sell Specialised Investment Funds (SIFs) and for those working in the derivatives segments of recognized stock exchanges.
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