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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Legal and Regulatory Environment

Under the SEBI framework for equity derivatives in India, which of the following is the correct statement about a stock exchange's derivatives segment?

Exchange-traded derivatives in India are securities under the SCRA, so a contract can be introduced only after SEBI approval and must be cleared and settled through a clearing corporation or clearing house of the recognised exchange.

  1. ADerivatives contracts can be traded on any exchange without SEBI approval of the contract
  2. BA derivatives contract may be introduced on an exchange only after it is approved by SEBI, with the exchange having a clearing corporation or clearing houseCorrect
  3. COnly unlisted securities can be underlying for exchange-traded derivatives
  4. DExchange-traded derivatives are outside the scope of the Securities Contracts (Regulation) Act

Explanation

Derivatives are 'securities' under the SCRA, so contracts need SEBI approval and trade only on recognised exchanges with clearing and settlement through a clearing corporation. The other options contradict this; underlying securities must be eligible and liquid, not unlisted.

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