UNIT II: Exchange Traded Currency Futures, trading mechanism Currency futures, Spot price, Futures price, Contract cycle, Value date/Final settlement date, Expiry date, Contract size, Initial margin, Marking-to-market, Rationale behind currency futures, Standard items in a futures contract, Futures and forward contracts, Advantages and limitation of futures contracts, Hedging using currency futures, Types of hedgers, Size of the hedging position, Concept of arbitrage, Use of arbitrage in currency futures markets, Arbitrage opportunities under various conditions UNIT III: Trading in Currency Futures &Clearing, Settlement and Risk Management in Currency Futures and regulations Contract specification for currency futures, Trading parameters, Clearing entities, Clearing mechanism, Open positions and obligations of clearing members, Settlement mechanism, • MTM settlement • Final settlement, Risk management measures, Concept of margin requirements, Initial margin, Portfolio based margin, Calendar spread margin, Extreme loss margin, Liquid net worth, Liquid assets, Real time computation, Process of margin collection by Clearing Corporations, Role of regulators and relevant regulations UNIT IV: Introduction to Commodity Markets, Futures and Options Commodity Markets Ecosystem, Commodity Market Indices, Factors Impacting the Commodity Prices, Commodity Futures and Commodity Forwards, Pay-off profile for Futures Contracts, Spot Price Polling, Options on Commodity Futures UNIT V: Commodity trading mechanism and Regulation in commodity derivatives Membership, trading system, contract specification, clearing and settlement, delivery process, risk management, margin mechanism, accounting and taxation, regulations, role of regulator Text Books: 1. NISM (2019), NISM-Currency Derivatives Module, Delhi: Taxman 2. NISM(2019), Commodities Markets Module, Delhi: Taxman Reference Books: 1. Keith Redhead(1998), Financial Derivatives, New Delhi: Prentice Hall of India 2. Franklin R. Edwards (1992) Cindy W.Ma. Futures & Options. Bangalore: McGraw Hill 3. IIBF(2009), Commodity Derivatives, Delhi: Mac Millan E 4. Niti Nandini Chatnani.(2009),Commodity Markets and Derivatives, Noida:Cengage
20BC2045 CLEARING, SETTLEMENT & RISK MANAGEMENT Credits: 4: 0: 0 Course Objectives: 1. To learn the procedures of Clearing, Settlement, Collateral Management and the Risk Management 2. To explain the vital functions of a Clearing Corporation. 3. To learn the importance of risk management Course Outcomes: After completing this course, they should be able to: 1. Remember the operational guidelines/procedures of Clearing, Settlement, Collateral Management and Risk Management in NSE Clearing Limited 2. Understand the capital market operations 3. Apply the concepts of securities lending and borrowing scheme 4. Evaluate the process of clearing and settlement in Equity and Currency derivatives 5. Analyze the various services offered by market intermediaries regarding clearing and settlement 6. Develop a suitable mix on services in Members portal
COMMERCE AND INTERNATIONAL TRADE (2020)
