Derivatives Trading in India

by
Vipul Mehta
Derivatives Trading at NSEIL
 Membership of NSE
 Trading Member (TM)
 Self-clearing Member
 Trading-cum-clearing Member (CM)
 Professional clearing Member
Settlement of Trades
 Futures Contracts
 MTM Settlement (daily settlement)
 Final settlements
 Options Contracts
 Daily premium settlement
 Interim exercise settlement (for American Options)
 Final exercise settlement
Commodity Derivatives Trading in India
 Commodity Exchanges
 NCDEX
 MCX
 NMCE
Commodity Derivatives Trading in India
 NCDEX
 Membership eligibility:
 Individuals
 Sole proprietorships
 Partnership firms
 Co-operative societies registered
 Companies, corporations or institutions incorporated under Companies
Act, 1956
 Individuals persons/entities
Commodity Derivatives Trading in India
 NCDEX
 Products
 Futures & Options
 Commodities
 Cereals and pulses
 Fibres
 Guar complex
 Plantation products
 Oil and oil seeds
 Soft
 Spices
 Metals
 Previous metals
 Energy
 Others
Commodity Derivatives Trading in India
 NCDEX
 Forward Contract
 Reference Price Contract
 Taking reference of a corresponding futures contract
 Fixed Price Contract
 Settlement of Forward Trades
 Transferable Specific Delivery (TSD)
 Non-transferable Specific Delivery (NTSD)
Commodity Derivatives Trading in India
 NCDEX
 Trading Mechanism
 Margin System
 Clearing
 Settlement
 Physical v. Cash Settlement
Currency Derivatives in India
 Currency Derivatives Trading on United Stock
Exchange (USE)
 Currency Futures
 USD
 EURO
 GBP
 JPY
Currency Derivatives in India
 Currency Derivatives Trading on United Stock Exchange (USE)
 Unit of trading: 1000 units of currency
 Contract trading cycle: Twelve-month cycle with monthly duration of contracts
 Last trading day: Two working days prior to the last business day of the expiry
month
 Final settlement day: Last working day of the expiry month
 Client level position limit: Max of 6% of total open interest or USD 10m
 Trading member level position limits: 15% of total open interest or USD 50m
 Banks: 15% of the total open interest or USD 100m
 Daily settlement price: Calculated on the basis of last half an hour weighted
average price of the day
 Final settlement price: RBI reference rate for the last trading day of the expiry
month
 Margin: Initial margin as well as extreme loss margin at the rate of 1% of mark-to-
market value of open position
Currency Derivatives in India
 Currency Derivatives Trading on United Stock Exchange
(USE)
 Currency Options – US Dollar Rupee Currency Options Contract
 Underlying: USD-INR
 Contract size: One contract is for 1000 USD
 Quotation: Premium in rupee terms and outstanding position in USD
 Type of option: European Call and European Put
 Duration: Three consecutive serial month contracts as well as contracts
with quarterly duration
 Position limits: As applicable for currency futures contracts
 Final settlement price: RBI reference rate for last trading day of the
expiry month
 Final settlement: All in-the-money settled in cash