Interest rate Derivatives Certification Examination Overview

 

An interest-rate derivative is a financial instrument with a value that increases and decreases based on movements in interest rates; among the most common are interest rate swaps, caps, and floors.

 

What are the course objectives?
  • Know the basics of fixed income securities markets and specifically interest rate derivative markets in Indian and developed world.
  • Understand the analytical framework required for Bond Futures market in India along with trading and hedging strategies involved
  • Understand the clearing, settlement and risk management as well as the operational mechanism related to interest rate derivatives markets
  • Know the regulatory environment in which the interest rate derivatives markets operate in India.
Course Fees ?

 Fees Details

Name of Module: NISM-Series-IV: Interest Rate Derivatives Certification Examination

Fees (Rs.) Test Duration (in minutes) No. of Questions Maximum Marks Pass Marks* (%) Certificate # Validity (in years)
1500+ 120 100 100 60 3
Benefits from this Course ?
  • Interest rate derivatives opt for adjustments of portfolios
  • They are more liquid compared to the underlying instrument
  • They help in lowering the cost of funding
  • Speculative positions can be taken in context to future movement in interest rates
  • They can provide yield irrespective of the market conditions
  • Market participants use interest rate derivatives either to hedge the risk or take future positions
  • It helps in mitigating the risk from unpredictable interest rate swings (risk diversification instrument)

About us

 

The examination seeks to create a common minimum knowledge benchmark for persons working in the Interest Rate Derivatives market segment, in order to enable a better understanding of fixed income securities markets and interest rate derivative products, regulations and risks associated with the products and the exchange mechanisms of clearing and settlement.

  • Know the basics of fixed income securities markets and specifically interest rate derivative markets in Indian and developed world.
  • Understand the analytical framework required for Bond Futures market in India along with trading and hedging strategies involved
  • Understand the clearing, settlement and risk management as well as the operational mechanism related to interest rate derivatives markets
  • Know the regulatory environment in which the interest rate derivatives markets operate in India.

Frequently Asked Questions

Who can take NISM-Series-IV: Interest Rate Derivatives Certification Examination?

The following persons can take NISM-Series-IV: Interest Rate Derivatives Certification Examination:

  1. Approved users and sales personnel of the ‘Trading Members’ who are registered as such in the Currency Derivatives Segment of a recognized stock exchange and trading in Interest Rate Derivatives.
  2. Interested students/professionals
  3. Any other individuals
How can I register for NISM-Series-IV: Interest Rate Derivatives Certification Examination?

Candidates can register with any of the following Test Administrators National Institute of Securities Markets (NISM) https://certifications.nism.ac.in/nismaol/For registrations candidates may visit any of the above websites.After successful registration, candidates may select a test center, date and time slot of their choice on the Test Administrator website. Candidates are required to follow further instructions available on the Test Administrator websites.

What is the assessment structure?

The examination will be of 100 marks, will have 100 questions, and should be completed in 2 hours. There will be negative marking of 25% of the marks assigned to a question. The passing score for the examination is 60%.

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Syllabus 

 

Chapter -1: Fixed-income or Debt Securities – Introduction

  •  Financial Markets: Overview
  •  Debt/ Fixed-income Securities : Introduction
  •  Debt/ Fixed-income Securities : Classification
  •  Fixed-income Securities vs. Fixed-return Securities
  •  Debt Securities vs. Equity Securities
  •  Relative Size of Debt and Equity Markets: Globally and in India

Chapter -2 : Interest Rate – Introduction

  • Concept of Interest Rate
  • Risk-free Interest Rate vs. Risky Rate
  • Term Structure of Rates: Shapes
  • Term Structure of Rates: Shifts
  • Conversion of Rate into Amount
  • Accrued Interest

Chapter – 3 : Return and Risk Measures for Debt Securities

  • Return Measure: Spot Rate
  • Coupon, Current Yield and Yield-To-Maturity
  • Spot rate, Bond price and YTM
  • Risk Measures

Chapter – 4 : Interest Rate Derivatives

  • Derivatives: Definition and Economic Role
  • Interest Rate Derivatives
  • Over-The-Counter (OTC) vs. Exchange-Traded Derivatives
  • Derivatives Market in India

Chapter – 5 : Contract Specification for Interest Rate Derivatives

  • Underlying Assets of Permissible Interest Rate Derivative Contracts in India
  • Market Lot / Contract Amount
  • Contract Months, Expiry Dates and Last Trading Day of Exchange Traded Derivatives
  • Price Quotation and Tick
  • Daily Settlement Price
  • Final Settlement Price
  • Delivery Aspects of Interest Rate Derivatives Contracts

Chapter – 6 : Trading, Clearing, Settlement and Risk Management

  • Operational Guidelines of Exchanges
  • Order Types and Execution
  • Spread Orders
  • Margining and Mark-To-Market (MTM)
  • Clearing and Settlement
  • Procedure for Delivery

Chapter – 7 : Regulations and compliance

  • Role of Various Regulators in Bond and Interest Rate Derivatives Market
  • Restrictions and Limits Applicable to Resident and Non-resident Investors
  • List the Regulatory Reporting Requirements
  • Accounting Aspects of Interest Rate Derivatives

Chapter – 8 : Trading and Hedging

  • Speculative / Trading Strategies
  • Hedging Strategies
  • Basis Risk, Yield Curve Spread Risk and Market Liquidity Risk