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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Forwards and Futures

A long futures position at the end of the expiry day in India's index futures is settled in which manner?

Index futures in India are cash settled on expiry. The final settlement price is the closing value of the underlying index on the expiry day, and only the difference is paid in rupees, with no delivery of constituent shares.

  1. APhysical delivery of all index constituent shares
  2. BCash settlement at the closing price of the underlying index on expiryCorrect
  3. CRolled over automatically to next month
  4. DSettled at the previous day's futures settlement price

Explanation

Index futures in India are cash settled; the final settlement price is the closing value of the underlying index on the expiry day. No physical delivery of constituents occurs and no automatic rollover happens.

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