Arbitrage: Overpriced futures: buy spot, sell futures

Arbitrage: Underpriced futures: buy futures, sell spot

OPTIONS PAYOFFS
CHAPTER 1
Payoff profile of buyer of asset: Long asset
Payoff profile for seller of asset: Short asset
INTRODUCTION TObuyer
Payoff profile for DERIVATIVES
of call options: Long call
Payoff profile for
DERIVATIVES writer of call options: Short cal
DEFINED
Payoff profile
FACTORS for buyer
DRIVING THEof GROWTH
put options:OFLong put
DERIVATIVES
Payoff profilePRODUCTS
DERIVATIVE for writer of put options: Short put
P RICING OPTIONS IN THE DERIVATIVES MARKETS
PARTICIPANTS
A PPLICATION FUNCTION
ECONOMIC OF OPTIONS OF THE DERIVATIVE MARKET
Hedging: Have
EXCHANGE-TRADED underlying buy puts
VS. OTCDERIVATIVES MARKETS
Speculation:
NSE' Bullish MARKET
S DERIVATIVES security, buy calls or sell puts8
Speculation: Bearish
Participants and security, sell calls or buy puts
functions.
Bull spreads
Trading - Buy a call and sell another
mechanism
Bear spreads - sell a call and buy another
CHAPTER
THE GREEKS 2. .
Delta ( )
INTRODUCTION TO FUTURES & OPTIONS AND SWAPS
Gamma ( CONTRACTS
FORWARD )
LIMITATIONS
Theta ( OF FORWARD MARKETS
INTRODUCTION
Vega TO FUTURES
DISTINCTION
Rho( ) BETWEEN FUTURES AND FORWARDS CONTRACTS
FUTURES TERMINOLOGY
CHAPTER
INTRODUCTION
4 TO OPTIONS
OPTION TERMINOLOGY
TRADING
FUTURES AND OPTIONS
INDEX DERIVATIVES.
FUTURES AND OPTIONS T RADING SYSTEM
Interest Rate Swap
Entities in the trading system
Basis Swap.
Basis of trading
CHAPTER
Corporate3 hierarch
Client Broker Relationship in Derivative Segment
Order types and
APPLICATIONS OFconditions
FUTURES AND OPTIONS
THE TRADER WORKSTATION
TRADING UNDERLYING VERSUS TRADING SINGLE STOCK FUTURES.
The market watch window
FUTURES PAYOFFS.
Inquiry window
Payoff
Placingfor buyeronofthe
orders futures:
trading Long futures
system
Payoff
Market spread/combination order futures
for seller of futures: Short entry
PRICING FUTURES
Basket trading
PricingAND
FUTURES equity index futures.
OPTIONS MARKET INSTRUMENTS
Pricing
Contractindex futures given
specifications expected
for index dividend amount
futures
Pricing index futures given expected dividend yield
Contract specification for index options
PRICING STOCK FUTURES.
Contract specifications for stock futures
Pricing
Contractstock futures when
specifications for no dividend
stock optionsexpected.
Pricing stock futures when dividends are expected
CRITERIA FOR STOCKS AND INDEX ELIGIBILITY FOR TRADING
APPLICATION OF FUTURES
Eligibility criteria of stocks
Hedging: Long security,
Eligibility criteria sell futures
of indices
Speculation: Bullish security, buy futures
Eligibility criteria of stocks for derivatives trading.
Speculation:
especially on Bearish
accountsecurity, sell future
of corporate restructuring
 CHARGES.
CHAPTER 5.

CLEARING AND SETTLEMENT

CLEARING ENTITIES
Clearing members
Clearing banks
CLEARING MECHANISM
SETTLEMENT MECHANISM
Settlement of futures contracts
Settlement of options contracts
ADJUSTMENTS FOR CORPORATE ACTIONS
RISK MANAGEMENT
NSCCL-SPAN
Types of margins
MARGINING SYSTEM
SPAN approach of computing initial margins
Mechanics of SPAN
Overall portfolio margin requirement
Forms of collateral’s acceptable at NSCCL
Requirements to become F&O segment member
Requirements to become authorized / approved user
Position limits
Reporting of client margin.
ADJUSTMENTS FOR CORPORATE ACTIONS.
CHAPTER 7
ACCOUNTING FOR DERIVATIVES
Accounting for futures
Accounting for options
TAXATION OF DERIVATIVE TRANSACT ION IN SECURITIES
Taxation of Profit/Loss on derivative transaction in securities
Securities transaction tax on derivatives transactions

Chapter 1 Introduction to Financial System

Meaning
Flow of funds in the financial system
An overview of financial system
Financial Institutions
Financial Markets
Financial Instruments
Financial Services
Regulators
Chapter 2 Primary Market

Different kinds of Issues

Public Issue
IPO
FPO
Rights Issue
Bonus Issue
Preferential allotment
Qualified Institutions Placement (QIP)
OFFER DOCUMENTS
Draft offer document
Red Herring Prospectus
Prospectus
Letter of Offer
Placement Document
Understanding the Offer document
Cover page
Risk Factors
Introduction
About us
Financial Statements
Legal and other Information
Other regulatory and statutory disclosures
Offering information
Other information
Regulation for Different kinds of Issues
SEBIs role in an Issue
Issue Requirments
A) Entry Norms
Mandatory Norms
Fast Track Issues (FTI)
Pricing by Companies Issuing Securities
Public/ Rights Issue by listed companies
Public Issue by Unlisted Companies
Initial Public Issue by Banks
Differential Pricing
Price Band
Dertemining denomination of Shares for Public/ Rights Issues
Pricing of an Issue
Book Building
Price Band
Process of Book Building
Types of Investors & Allotments made to them
Retail Individual Investor (RIIs)
Qualified Institutional Buyer (QIB)
Non Institutional Investors (NIIs)
Allotment to various kinds of Investors
In case of Book built Issue
In case of Fixed price Issue
Firm Allotment Investor Categories
Intermediaries involved in the Issue process
Merchant Banker
Registrars to the Issue
Bankers to the Issue
Underwriters
ASBA
Meaning
ASBA Investor
Advantages of ASBA
Self certified Syndicate Bank (SCSB)
Issues by Foreign Companies in India (Indian Depository Receipts) (IDRs)
Meaning
Legislations governing IDRs
Eligibility criteria for IDRs
Intermediaries involved in issuance of IDRs
Conversion of IDRs in to underlying equity shares
Distribution of the corporate benefits to the IDR holders
Foreign Capital Issuance
Global Depository Receipts (GDRs)
American Depository Receipts (ADRs)
Foreign Cuurency Convertible Bonds (FCCBs)
External Commercial Borrowings
Guidelines relating to International Issues
Concept clarifiers for Primary Market

Chapter 3 Financial Markets

Functions of Financial Markets

Borrowing and Lending
Price Determination
Information aggregation and coordination
Risk Sharing
Liquidity
Efficiency
Types of Financial Markets
Securities markets
Money markets
Foreign Exchange markets
Commodity markets
Insurance market
Chapter 4 Securities Market in India

Definition of Securities
Functions of Securities Market
Mobilization of savings and acceleration of capital formation
Promotion of Industrial growth
Raising long term capital
Ready and continuous market
Proper channelization of funds
Provision of a variety of services
Market Segment in Securities Market
Primary Market
Secondary Market
History of Securities Market
Market Participants in Securities Market
Investors
Issuers
Intermediaries
Regulators
Components of Securities Market
Cash/ Equity markets & its products
Equity Derivatives Market
Debt Market
Collective Investment Vehicles
Mutual Funds
Advantages of Mutual Funds
Structure of Mutual Funds
Types of MFs/ SCHEMES
Regulation of Mutual Funds
Index Funds
Exchange Traded Funds
Stock Market Indicators
Market Capitalization
Turnover
Turnover Ratio
Market Capitalization Ratio
Traded value Ratio
Index Movements
Index Construction Issues
Reforms in Indian Securities Markets

Chapter 5 Money Market

Meaning
Indian Money Market
Players in the money market
Role of RBI in money market
Money market Instruments
Call money market
Term money market
Repo market
CBLO
T-Bills
Certificate of Deposits (CDs)
Commercial Papers (CPs)
Interest Rate Derivatives
Link between the money market and Debt market

Chapter 6 Forex Market

Meaning
Participants in FX Market
Participants in the Indian Forex Market
Restricted Money Changers (RMC)
Full Fledged Money Changers (FFMC)
Authorised Dealers (AD)
Brokers
ISO Codes
Forex Spot Trading
Forex Derivative
Forward contract
Non Deliverable Forwards
FRAs
Swaps
Option contracts
Currency Futures

Chapter 7 Commodity Derivatives Market

Meaning
Evolution of Commodity Derivative Markets in India
Products in the Commodity Derivatives Markets
Regulation and Legal Framework
Difference between commodity and financial derivatives
Commodity derivatives
Financial derivatives
Physical settlement
Cash settlement
Need for Warehousing
No need for warehousing
Variance in Quality is an Issue
Variance in Quality is not an Issue

Chapter 8 Insurance Market

Meaning
Classification of Insurance Sector
Insurance Intermediaries
Agents
Surveyors and Loss Assessors
Brokers
Third party administrators
Bancassurance
Players in Insurance Industry
Regulations for the Insurance Industry
The Indian Insurance industry is governed by the Insurance Act 1978, The General Insurance
Business (Nationalization) Act, 1972, Life Insurance Corporation Act, 1956 and Insurance
Regulatory and Development Authority Act, 1999

Chapter 9 Corporate Actions

Meaning
Classification of Corporate Actions
Types of Corporate Actions
Dividends
Stock Split
Buy back
Mergers and Acquisitions
Rights Issues
Bonus Issue

Chapter 10 Financial Statements

Types of Financial Statements

Balance Sheet
Profit and Loss Account
Comparative Financial Statements
Common Size Statements
Ratio Analysis

Chapter 11 Time value of Money

Meaning
Future value of a single cash flow
Present value of a single cash flow
Present value of an annuity
Chapter 12 Regulations and Regulatory Framework

Regulators of Indian Financial System

SEBI
RBI
FMC
IRDA
PFRDA
Regulatory framework for Securities Market
Capital Issues (control) Act, 1947
SEBI Act, 1992
Securities Contracts (Regulation) Act, 1956
Depositories Act, 1996
Companies Act, 1956
Prevention of Money Laundering Act, 2002
DIP Guidelines
Insider Trading
Takeover
Buy Back
Regulation for derivatives trading

National Stock Exchange

Name of the course : NSE Certified Capital Market Professional (NCCMP)

Course Duration : 100 hours (80 hours theory, 20 hours practical), between 5-6
months

Syllabus :

§ Introduction to Financial Markets

§ Derivatives

§ Trading System

§ Macro Economics

§ Fundamental Analysis

§ Technical Analysis

§ Market Operations
§ Currency Futures

§ Discussions on Financial Newspapers and Journals

§ Practical Training

Tests : Mid term, End term and Project work

Mid term test and project work to be conducted by the college

NSE to conduct end term on-line exams.

Theory part will be covered by the college, practical part by a trading

member showing hands on trading, broking operations etc. NSE will take
up lectures for 8 hours out of the 80 hours.

Soft copy of workbooks will be provided by NSE. College to make copies

and distribute to student.

Certification : Joint NSE-College Certification after passing exams.

Fees sharing : Rs.5250 per student plus actual expenses for practical training.
Practical training will either be at a local office in Mysore ( in which case only minimal
expenses will be there) or at a professional office in Mumbai for a period of 3 to 4 days,
in which case the students have to bear the expenses for travel and stay. A final
decision on the location of the training will be taken after taking into account the
views of the students and/or the availability of suitable centres.

Agreement : Agreement to be signed between college and NSE.

FAQ on NSE Certified Capital Market Professional (NCCMP)

What is NSE Certified Capital Market Professional?

NSE Certified Capital Market Professional (NCCMP) is a course launched as a joint-cooperation

between National Stock Exchange of India Limited and reputed Educational Institutes across
the country to impart knowledge and awareness about the securities market and thereby
upgrade the skills and proficiency of the participants (candidates) of the course

Who can register?

The students of the associated Institute, other Institutes, working professionals, Investors etc
can register for NCCMP. Basic educational qualification would be as decided by the respective
institute.

How to register?

The candidate has to contact the course coordinator/ admissions officer of the respective
institute and register by fulfilling the requisite details and making payment of necessary fees.
What is the duration of the Course?

Total number of hours would be 100 which include 80 hours of theoretical session & 20 hours of
practical Training spread over a period of four to six months. The dates of the course would be
as decided by the respective institute.

What are the Course Contents?

 Introduction to Financial Markets

 Derivatives

 Trading System

 Macro Economics

 Fundamental Analysis

 Technical Analysis

 Market Operations

 Currency Futures

 Discussions on Financial Newspapers and Journals

 Practical Training

What is the Training Methodology?

There would be 80 hours of theoretical session conducted by the respective Institute which
would also include few sessions conducted by NSE.

There would be 20 hours of practical sessions on the Trading System (mock or simulated
environment) and exposure to back office operations at a NSE Trading Member office in the
respective location where the Educational institute is situated.

What is the Examination Methodology?

Basically two examinations and a project work have to be completed during the course. Details
are as follows

Mid term Exam – Conducted by the respective Institute.

Project work – Topic shall be provided by the respective institute and the same shall be
submitted and evaluated by the respective institute before the candidate appears for End term
exam.
End term Exam - On-line Examinations to be conducted by NSE at the same location where the
course was conducted or at a nearby location. Date of Exam shall be finalized by NSE in co-
ordination with the respective Institute and once the same is confirmed no change of dates are
possible for any candidate.

What are requisites for course completion?

 Securing at least 50% marks in Mid term examination

 Submission of project work of satisfactory quality
 Securing at least 50% marks in End term examination

What if I am unable to secure the requisite percentage?

The candidate would be given another opportunity to meet the above mentioned requisite. If the
same is not met then the candidate can avail of a participant certificate or appear for the Exam
along with the next batch of students pertaining to the respective institute by paying the
Examination fees which would be decided from time to time by the respective institute/ NSE.

When the Certificate will be awarded?

Upon successful completion, the candidate would be issued a joint certificate by the respective
institute and NSE. The certificate would be distributed by the respective institute within a period
of one month from the date of course completion.

What is the Course Fee?

The student to contact the respective institute for the same. The fee covers the cost of study
material (provided by respective college), Examination fees, certificate, practical training
sessions etc.

Is this course an substitute for any of the NCFM Modules?

No. This course would facilitate the candidates in easier understanding of various NCFM
modules and the candidates would be encouraged to appear for more NCFM modules.

How this course is different from NCMP?

NCMP is a certification awarded by NSE exclusively to the candidates who have completed
various NCFM modules as prescribed from time to time and is completely different from
NCCMP.