Description
Taxmann Equity Derivatives edition 2025 by SEBI
Equity Derivatives offers a structured and comprehensive approach to understanding the concepts, mechanics, and regulatory frameworks governing equity derivatives in India. It seamlessly blends foundational knowledge of derivatives with current market practices, regulatory requirements, and practical trading insights.
This book is intended for the following audience:
Aspiring Equity Derivatives Professionals – Individuals preparing to appear for the NISM-Series-VIII: Equity Derivatives Certification Examination or those looking to enter the field of derivatives trading
Brokers, Dealers & Sales Personnel – Professionals working in stockbroking, proprietary trading, or sales roles who wish to stay updated on operational and regulatory aspects of equity derivatives
Risk Managers & Analysts – Market participants who handle risk management or research functions, seeking more profound insight into trading strategies, payoff structures, and the clearing and settlement mechanism
Students & Academics – Individuals pursuing finance or commerce programs and researchers aiming to fortify their knowledge of Indian securities markets and equity derivatives
Investors & Market Enthusiasts – Anyone interested in understanding how equity derivatives can be employed for hedging, speculation, or arbitrage, along with a keen grasp of associated risks and regulations
The Present Publication is the March 2025 Workbook Version, developed in collaboration with the Certification Team of NISM and Dr Aparna Bhat. It is published exclusively by Taxmann, with the following noteworthy features:
[Aligned to NISM Certification Requirements] Developed in conjunction with the Securities and Exchange Board of India (SEBI) regulations, ensuring relevance and alignment with the NISM-Series-VIII: Equity Derivatives Certification Examination
[Comprehensive Coverage] Spans from fundamental concepts of derivatives and market architecture to sophisticated trading strategies, clearing and settlement, risk management, and the legal and regulatory environment
[Lucid and Focused Content] Explains complex derivative terminologies concisely, supported by practical examples, illustrations, and payoff charts for both futures and options
[Industry-endorsed and Reviewed] Jointly created by NISM's Certification Team, stock exchange representatives, and reputed market practitioners, ensuring the material is accurate and up-to-date
[Practical Insights] Delves into hedging strategies, speculative trading, arbitrage mechanisms, margining systems (SPAN), and risk management practices, equipping readers with know-how that is immediately applicable
The coverage of the book is as follows:
Basics of Derivatives
Evolution of derivatives in India
Types of derivative instruments (forwards, futures, options)
Market participants & their roles (hedgers, speculators, arbitrageurs)
Understanding Index
Construction and significance of stock indices
Major Indian market indices and their attributes
Applications of indices for benchmarking and trading
Introduction to Forwards and Futures
Forward vs. futures contracts
Futures pricing, contract specifications, and payoff structures
Price convergence and the role of margin in futures
Introduction to Options
Call and put options: moneyness, intrinsic value, time value
Option Greeks (Delta, Gamma, Theta, Vega) and implied volatility
Practical examples of buying/selling calls and puts
Strategies Using Equity Futures and Equity Options
Trading strategies for hedging, speculation, and arbitrage
Put-call parity and its applications
Delta-hedging techniques and interpreting open interest data
Trading Mechanism
Eligibility criteria for stocks & indices to be traded in derivatives
Order types, corporate action adjustments, and trading costs
Algorithmic trading and investor risk reduction access (IRRA)
Clearing, Settlement, and Risk Management
Role of clearing members and clearing corporations
SPAN margining system, mark-to-market, and position limits
Settlement guarantee fund, investor protection fund, and cybersecurity
Legal and Regulatory Environment
Key regulations under SCRA and SEBI Act
Compliance guidelines for market intermediaries
Standard Operating Procedure (SOP) for exchange outages and defaults
Accounting and Taxation
Accounting practices for derivative transactions
Tax treatment for profits/losses from derivative trades
Record-keeping and reporting obligations
Sales Practices and Investor Protection Services
Risk disclosure documents & client profiling
Anti-money laundering procedures & KYC requirements
Grievance redressal mechanisms and regulatory best practices
The structure of the book is as follows:
Introductory Chapters – Provide the basics of the Indian securities market and introduce the concept of derivatives
Core Chapters – Cover in-depth discussions of futures, options, derivatives strategies, regulations, and risk management, ensuring robust knowledge for exam preparation and professional application
Practical & Operational Chapters – Offer step-by-step guidance on trading processes, margining & settlement, position limits, and compliance procedures, vital for day-to-day operations in a derivatives trading environment
Appendices & Resources – Include supplementary materials, references, and additional reading resources for comprehensive learning and exam readiness