NISM Certifications · NISM-Series-VIII: Equity Derivatives · Legal and Regulatory Environment
Under the SEBI framework for equity derivatives in India, which body is empowered to approve the introduction of a new derivative contract on a stock exchange before it is launched?
SEBI approves new derivative contracts. A recognised stock exchange has to submit its proposal to SEBI and may launch the contract only after approval, because SEBI is the regulator of the securities market, including equity derivatives.
- AThe stock exchange alone, without any regulatory approval
- BSEBI, after the exchange submits the proposal for the contractCorrect
- CThe clearing member of the exchange
- DThe Reserve Bank of India
Explanation
A recognised stock exchange must obtain SEBI's approval before launching any new derivative contract. The exchange cannot launch on its own, the clearing member has no such power, and RBI does not regulate equity derivative contracts.
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