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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism

In the Indian equity derivatives market, which of the following is the standard lot-size related rule applied by exchanges when they decide the market lot of a new index or stock derivative contract?

Exchanges fix the market lot of a derivative contract so that the contract value at introduction falls within the range prescribed by SEBI. The lot size is not a universal 100 units, is not set by clearing members, and is not revised every day.

  1. AThe contract value at the time of introduction is kept within a range set by SEBICorrect
  2. BThe lot size is always fixed at 100 units for every contract
  3. CThe lot size is decided by the clearing member of each trader
  4. DThe lot size changes daily with the closing price of the underlying

Explanation

SEBI prescribes a range for the contract value of derivative contracts at introduction, and exchanges set market lots accordingly. Lot size is not fixed at 100 for all, is not set by clearing members, and does not change daily.

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