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

Which of the following statements about the eligibility of a stock for introduction of derivatives contracts on Indian exchanges is most accurate?

Derivatives are introduced only on stocks meeting SEBI-prescribed eligibility criteria, which cover factors such as market capitalisation, trading volume and market-wide position limits. They are not available on every listed stock, and are not limited to public sector companies or Sensex constituents.

  1. AAny listed stock can have derivatives introduced without any criteria
  2. BOnly stocks meeting SEBI-prescribed criteria such as market capitalisation, trading volume and market-wide position limits eligibility qualifyCorrect
  3. COnly stocks of public sector companies qualify
  4. DOnly stocks included in the Sensex qualify

Explanation

SEBI prescribes eligibility criteria for stocks entering the derivatives segment, covering aspects like market capitalisation, liquidity/trading volume and the quarter-sigma order size and market-wide position limit. It is not open to every listed stock, nor restricted to PSUs or Sensex constituents.

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