Currency Derivatives
Exchange-traded currency futures, options, and forex derivatives — pricing, strategies, clearing, and SEBI regulatory framework.
Exam Pattern & Marking
Detailed Syllabus
10 chapters · 100 total marks
| # | Chapter | Marks | Practice Qs |
|---|---|---|---|
| 1 | Exchange Traded Currency Futures | 20 | 118 |
| 2 | Exchange Traded Currency Options | 20 | 115 |
| 3 | Clearing Settlement and Risk Management | 10 | 67 |
| 4 | Introduction to Currency Markets | 10 | 61 |
| 5 | Strategies Using Currency Derivatives | 10 | 62 |
| 6 | Trading Mechanism | 10 | 60 |
| 7 | Accounting and Taxation | 5 | 30 |
| 8 | Codes of Conduct and Investor Protection | 5 | 38 |
| 9 | Foreign Exchange Derivatives | 5 | 29 |
| 10 | Regulatory Framework | 5 | 50 |
| Total | 100 | 630 |
Marks per chapter reflect the official NISM syllabus weightage. Practice question counts show the bank size in our app — use them to gauge depth of preparation needed per chapter.
Key Knowledge Areas
Overview
Series I is the currency derivatives certification — required for dealers, traders, and risk managers active in the exchange-traded currency segment at NSE, BSE, and MSE. Indian exchanges trade currency futures and options on USDINR, EURINR, GBPINR, JPYINR, and a few cross-currency pairs.
At a glance: 100 questions · 2 hours · 60% pass mark · 0.25 negative marking · ₹1,500 + GST.
Who should take I
- Currency dealers at brokers
- Treasury staff at corporates and banks
- Forex risk managers
- Anyone seeking the exchange-traded FX qualification
Key Knowledge Areas
Forex market structure
The Indian forex market has two layers:
- OTC interbank market — banks transacting with corporate clients and each other (regulated by RBI)
- Exchange-traded segment — NSE / BSE / MSE futures and options (regulated by SEBI under FEMA)
Pricing currency futures
Cost-of-carry / IRPT: F = S × (1 + r_INR·T) / (1 + r_USD·T)
Interest Rate Parity Theorem links forwards to spot via the rate differential. Arbitrage keeps F close to this no-arbitrage value.
Hedging strategies
| Strategy | When to use |
|---|---|
| Long futures | Hedge a future USD payable (importer) |
| Short futures | Hedge a future USD receivable (exporter) |
| Long call (USDINR) | Cap USD purchase cost while keeping upside |
| Long put (USDINR) | Floor USD sale proceeds |
| Range forward | Cap + floor combination at zero or low cost |
Regulatory framework
- RBI governs OTC FX, FEMA classifications, capital account
- SEBI governs exchange-traded segment (members, products, position limits)
- Position limits — client-level and member-level caps published per pair
- Eligibility — anyone with PAN can trade exchange currency derivatives (no FEMA permission needed for exchange-traded)
Key Fact: Cross-currency pairs (EURUSD, GBPUSD, USDJPY) on Indian exchanges have wider applicability for global hedging without involving INR.
Exam Tips
Tip 1: Currency futures pricing via IRPT is a guaranteed exam topic. Learn to compute fair value and identify arb opportunities.
Tip 2: Hedging case studies (importer, exporter, FX-exposed loans) come up. Know which derivative is appropriate for each client.
Tip 3: Regulatory chapter distinguishes OTC vs exchange-traded — keep the boundaries clear (RBI vs SEBI authority).
Tip 4: Settlement on currency futures is cash-settled in INR — no currency delivery. This trips up traders coming from commodity F&O.
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