NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism
Which statement about the price band or circuit filters applicable to index options and index futures on NSE is correct?
Index futures orders are subject to dynamic price bands, and market-wide circuit breakers halt trading when the index moves by specified percentages. Such breakers operate during trading hours and cover the whole market, so claiming there are no bands or that they apply only to stock options is wrong.
- AIndex futures have a dynamic price band for orders, and trading is halted market-wide when index circuit breaker limits are triggeredCorrect
- BIndex futures have no price bands of any kind
- CCircuit breakers apply only to individual stock options
- DMarket-wide circuit breakers are applied only after the close of trading
Explanation
Exchanges apply operating ranges or dynamic price bands to futures orders to prevent erroneous prices, and index-based market-wide circuit breakers halt trading at specified index movements during the day. They are not limited to stock options and are not applied after the close.
Did you get it right without looking?
One question tells you little. A timed set on Trading Mechanism shows your real accuracy, how long you take and where you lose marks.
More Trading Mechanism questions
- Nifty futures have a lot size of 75. A trader buys 2 lots at Rs 24,000. The daily settlement price that day is Rs 24,060. What is the MTM ga…
- Under the exchange trading system, which order type is executed only if the specified price or better is available and any unexecuted part s…
- Which statement about the order types and conditions in the exchange's derivatives trading system is correct?
- Index futures are trading at 22,000 with lot size 50. A trader sells 3 lots at 22,000. On day 1 the settlement price is 22,120, and on day 2…
- Under the Indian exchange trading system, what does a 'Market Order' in the derivatives segment mean?
- In the NSE derivatives trading system, which type of order is held in the system and becomes active only when the market price reaches a spe…