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

Under the securities laws governing the Indian equity derivatives market, which body prescribes the eligibility criteria for stocks to be admitted for derivatives trading on a stock exchange?

SEBI prescribes the eligibility criteria for stocks to be admitted to derivatives trading. As the securities market regulator, it sets norms on market capitalisation, liquidity and position limits, and exchanges can list derivatives only on stocks that satisfy them.

  1. ASecurities and Exchange Board of IndiaCorrect
  2. BReserve Bank of India
  3. CClearing corporation of each exchange
  4. DMinistry of Corporate Affairs

Explanation

SEBI, as the market regulator, lays down the eligibility norms for stocks and indices to be introduced in the derivatives segment, such as market capitalisation, trading volume and market-wide position limit criteria. Exchanges then admit stocks that meet these norms. The RBI and the Ministry of Corporate Affairs do not set these criteria.

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