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

Under the SEBI-prescribed framework for equity derivatives in India, which of the following is the regulator that granted the power to approve the introduction of derivatives contracts on a stock exchange?

SEBI is the regulator that approves the introduction of equity derivatives contracts on stock exchanges. Derivatives are treated as securities under the Securities Contracts (Regulation) Act, 1956, so the securities market regulator, not RBI, MCA or IRDAI, governs their approval and trading.

  1. AReserve Bank of India
  2. BSecurities and Exchange Board of IndiaCorrect
  3. CMinistry of Corporate Affairs
  4. DInsurance Regulatory and Development Authority of India

Explanation

Derivatives contracts are securities under the Securities Contracts (Regulation) Act, 1956, and trading on exchanges is regulated by SEBI. SEBI approves the introduction of new derivative contracts on recognised stock exchanges. RBI regulates currency and interest rate matters, not equity derivatives.

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