Interest rate Derivatives Certification Examination Overview
An interest-rate derivative is a financial instrument with a value that increases and decreases based on movements in interest rates; among the most common are interest rate swaps, caps, and floors.
What are the course objectives?
- Know the basics of fixed income securities markets and specifically interest rate derivative markets in India and developed world.
- Understand the analytical framework required for Bond Futures market in India along with trading and hedging strategies involved
- Understand the clearing, settlement and risk management as well as the operational mechanism related to interest rate derivatives markets
- Know the regulatory environment in which the interest rate derivatives markets operate in India.
Course Fees ?
Fees Details
Name of Module: NISM-Series-IV: Interest Rate Derivatives Certification Examination
| Fees (Rs.) | Test Duration (in minutes) | No. of Questions | Maximum Marks | Pass Marks* (%) | Certificate # Validity (in years) |
| 1500+ | 120 | 100 | 100 | 60 | 3 |
* Negative marking – 25% of the marks assigned to the question.
+ Payment gateway charges extra.
# Passing Certificate will be issued only to those candidates who have furnished/ updated their Income Tax Permanent Account Number (PAN) in their registration details.
Benefits from this Course ?
- Interest rate derivatives opt for adjustments of portfolios
- They are more liquid compared to the underlying instrument
- They help in lowering the cost of funding
- Speculative positions can be taken in context to future movement in interest rates
- They can provide yield irrespective of the market conditions
- Market participants use interest rate derivatives either to hedge the risk or take future positions
- It helps in mitigating the risk from unpredictable interest rate swings (risk diversification instrument)
Interest Rate Derivatives Syllabus
Chapter -1: Fixed-income or Debt Securities – Introduction
- Financial Markets: Overview
- Debt/ Fixed-income Securities : Introduction
- Debt/ Fixed-income Securities : Classification
- Fixed-income Securities vs. Fixed-return Securities
- Debt Securities vs. Equity Securities
- Relative Size of Debt and Equity Markets: Globally and in India
Chapter –2: Interest Rate – Introduction
- Concept of Interest Rate
- Risk-free Interest Rate vs. Risky Rate
- Term Structure of Rates: Shapes
- Term Structure of Rates: Shifts
- Conversion of Rate into Amount
- Accrued Interest
Chapter – 3: Return and Risk Measures for Debt Securities
- Return Measure: Spot Rate
- Coupon, Current Yield and Yield-To-Maturity
- Spot rate, Bond price and YTM
- Risk Measures
Chapter – 4: Interest Rate Derivatives
- Derivatives: Definition and Economic Role
- Interest Rate Derivatives
- Over-The-Counter (OTC) vs. Exchange-Traded Derivatives
- Derivatives Market in India
Chapter – 5: Contract Specification for Interest Rate Derivatives
- Underlying Assets of Permissible Interest Rate Derivative Contracts in India
- Market Lot / Contract Amount
- Contract Months, Expiry Dates and Last Trading Day of Exchange Traded Derivatives
- Price Quotation and Tick
- Daily Settlement Price
- Final Settlement Price
- Delivery Aspects of Interest Rate Derivatives Contracts
Chapter – 6: Trading, Clearing, Settlement and Risk Management
- Operational Guidelines of Exchanges
- Order Types and Execution
- Spread Orders
- Margining and Mark-To-Market (MTM)
- Clearing and Settlement
- Procedure for Delivery
Chapter – 7: Regulations and compliance
- Role of Various Regulators in Bond and Interest Rate Derivatives Market
- Restrictions and Limits Applicable to Resident and Non-resident Investors
- List the Regulatory Reporting Requirements
- Accounting Aspects of Interest Rate Derivatives
Chapter – 8: Trading and Hedging
- Speculative / Trading Strategies
- Hedging Strategies
- Basis Risk, Yield Curve Spread Risk and Market Liquidity Risk