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Life Time

What is Currency Derivatives?

Currency derivative is a class of derivatives whose value is derived from the underlying asset,the currency value.A derivative based on currency exchange rates is an agreement that two currencies may be exchanged at a future date at a stipulated rate.Options and futures are by far the most common currency derivatives.


This course aims at providing a basic insight about currency markets and exchange traded currency future products and provide knowledge about various processes like clearing, settlement and risk management. This course also provide glimpse of quality investor service, operational process efficiency.


After completion of the course, an individual will have complete information about all the terminologies of the currency markets and specifically Exchange Traded Currency Derivatives markets.An individual will have a true and clear picture regarding the process of currency derivatives market like clearing and settlement, risk management ,operational mechanism , regulatory environment in which the Currency Derivatives markets operate in India etc.You will have clear understanding about the various trading strategies that can be built using currency futures and options.The syllabus covers all the topics with interactive sessions. Moreover the contents of the course covers all the topics for NISM ( National Institute Of Securities Markets ) Series - I : Currency Derivatives Certification Examination and makes every student capable of cracking it.You will be well prepared for the NISM examination.

Intended Participants

Anybody (Retail Traders,New Investors ,Students , Researchers , Financial Service Professionals , hedgers , importers , exporters , arbitrageur or any individual) having interest in the Derivative market and its operation and want to enhance his/her knowledge,overall productivity or want to build their career in this market are welcome.As not only we provide theoretical knowledge, but also practical application, mentoring and training guidance, to help each student achieve their goals for investing or trading.

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  • Brief history of foreign exchange markets
  • Major currency pairs
  • Overview of international currency markets
  • Basics of currency markets and peculiarities in India
  • Settlement date or Value date
  • OTC forward market
  • Exchange rate arithmetic- cross rate
  • Impact of market economics on currency prices
  • Economic indicators

  • Derivatives - Definition
  • Derivative products
  • Growth drivers of derivatives
  • Market players
  • Key economic function of derivatives
  • Financial market stability: Exchange-traded vs. OTC derivatives    

  • Currency futures - Definition
  • Futures terminology
  • Rationale behind currency future
  • Distinction between futures and forward contracts
  • Interest rate parity and pricing of currency futures

  • Market participants
  • Computing payoffs from a portfolio of futures and trade remittances 
  • Using currency futures for hedging various kinds of FX exposures
  • Use of currency futures by speculators and arbitrageurs
  • Use of currency futures by arbitrageurs
  • Trading spreads using currency futures
  • Limitations of currency futures for hedgers

  • Currency futures contract specification
  • Other terminologies with respect to contract specifications
  • Trader workstation screen (TWS)
  • Entities in the trading system
  • Types of orders
  • Price Limit Circuit Filter
  • Rules, regulations and bye laws of Exchange

  • Clearing vs Settlement
  • Clearing entities
  • Clearing mechanism
  • Regulatory guidelines on open position limits
  • Settlement mechanism
  • Risk management measures
  • Margin requirements
  • Mark-to-Market Settlement
  • Margin collection and enforcement
  • Periodic Risk Evaluation Report
  • Surveillance
  • Unique Client Code (UCC)

  • Options – Definition, basic terms
  • Difference between futures and options
  • Options in financial market
  • Style of options
  • Moneyness of an option
  • Basics of option pricing and option Greeks
  • Option pricing methodology
  • Option pay offs
  • Option strategies
  • Uses of currency options
  • Clearing, Settlement and Risk Management for options

  • Accounting
  • Name of accounts
  • Accounting entries for live positions
  • Accounting entries in case of default by a client
  • Disclosure requirements
  • Taxation of Currency Derivatives

  • Securities Contracts (Regulation) Act, 1956 [SC(R)A]
  • RBI-SEBI standing technical committee on exchange traded currency and interest rate derivatives
  • Foreign Exchange Management Act, 1999 - Provisions
  • Regulatory framework for exchanges
  • Regulatory framework for clearing corporations
  • Governing council of the exchange and clearing corporation
  • Eligibility criteria for members

  • Adherence to SEBI codes of conduct for brokers/ sub-brokers
  • Adherence to codes of conduct specific to currency derivatives segment
  • Grievance redressal mechanism for investors