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

Which statement about the regulation of derivatives contracts traded on recognised stock exchanges in India is correct?

Exchange-traded derivatives trade on a separate derivatives segment, and a clearing corporation guarantees settlement by becoming the counterparty to trades. Contracts need SEBI approval, and members do not settle bilaterally among themselves.

  1. ADerivatives must be traded on a separate segment, and trades are settled through a clearing corporation guaranteeing settlementCorrect
  2. BDerivatives may be traded on the cash segment without separate approval, with bilateral settlement
  3. CDerivatives trades are settled directly between members without a clearing corporation
  4. DDerivatives may be introduced by any exchange without SEBI approval

Explanation

Exchange-traded derivatives in India trade on a distinct derivatives segment, and the clearing corporation acts as counterparty and guarantor. Contracts need SEBI approval, so the other statements are wrong.

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