Description
Taxmann Interest Rate Derivatives edition 2025 by SEBI and NISM
Interest Rate Derivatives is a comprehensive reference developed by the National Institute of Securities Markets (NISM) to empower aspiring and existing professionals with a robust understanding of India's exchange-traded interest rate derivatives market. This workbook covers everything from the core concepts of fixed-income securities and interest rates to derivatives fundamentals, trading mechanisms, and regulatory Compliance, making it a one-stop guide for readers.
This book is intended for the following audience:
Approved Users & Sales Personnel – Individuals working or intending to work in the currency derivatives segment of recognised stock exchanges, specifically dealing in interest rate futures and options
Market Intermediaries & Compliance Officers – Professionals in brokerages, financial institutions, or advisory firms who need to keep pace with the latest regulatory and operational guidelines of the exchange-traded interest rate derivatives market
Students & Job Aspirants – Those looking to build or enhance their career in securities markets, seeking formal certification, and acquiring a rigorous understanding of interest rate products
Traders, Analysts & Finance Enthusiasts – Anyone passionate about trading strategies, risk management, and deep-diving into how interest rate derivatives work within the broader Indian financial market
The Present Publication is the March 2025 Workbook Version, developed in collaboration with the Certification Team of NISM and Mr A.C. Reddi & Mr Sunil M. Gawde. It is published exclusively by Taxmann, with the following noteworthy features:
[Aligned to NISM-Series-IV Exam Objectives] Thoroughly addresses the syllabus mandated for the NISM-Series-IV: Interest Rate Derivatives Certification Examination, ensuring learners are well-prepared
[Comprehensive Coverage of IRD Landscape] Spans the fundamentals of fixed income securities, various interest rate derivative products (futures & options), trading, clearing, settlement, and risk management mechanisms
[Step-by-step Approach] Breaks down complex topics like pricing, payoff diagrams, and hedging strategies into structured modules, supplemented with charts, examples, and market scenarios
[Regulatory & Operational Insights] Highlights essential SEBI, RBI, and NISM guidelines governing exchange-traded interest rate derivatives, equipping readers with practical compliance knowledge
[Practical Application & Illustrations] Features illustrations, sample questions, and practical case scenarios that mirror actual market conditions and day-to-day trading experiences
[Focus on Risk Management & Investor Protection] Discusses the role of margins, settlement cycles, and grievance redressal mechanisms to ensure participants trade responsibly and safeguard investor interests
The coverage of the book is as follows:
Introduction to Interest Rate & Fixed Income Markets
Basics of interest rates, term structure, risk-free benchmarks, and features of fixed-income securities
Differences between equity and debt securities, overview of India's primary and secondary debt markets
Interest Rate Derivatives
Definition, economic role, and types of derivatives (futures, forwards, options, and swaps)
Growth drivers, market participants, and comparison between OTC and exchange-traded contracts
Exchange-traded Interest Rate Futures
Contract specifications, payoff charts, pricing mechanisms, and trading rationale
Advantages, limitations, and practical applications of futures for hedging, arbitrage, and speculation
Exchange-traded Interest Rate Options
Basics of option—calls, puts, styles (European, American), moneyness, and option Greeks
Option pricing, implied volatility, payoff diagrams, and contract features in Indian exchanges
Strategies Using Exchange-traded IRD
Hedging interest rate exposure, trading strategies for speculation, arbitrage opportunities, and spread trading
Practical insights and limitations to ensure effective decision-making
Trading Mechanism & Market Structure
Order types, order matching, circuit filters, and trading costs in interest rate derivatives on Indian exchanges
Best practices in order management and routing systems
Clearing, Settlement & Risk Management
Detailed overview of clearing entities, margining systems, position limits, funds settlement, and physical delivery
Risk management frameworks, margin collection processes, and the significance of settlement guarantee funds
Regulatory Framework
Key laws governing IRD, such as SC(R)A, RBI-SEBI circulars, exchange regulations, and membership criteria
Participation norms for various entities and the role of FIMMDA in India's derivatives ecosystem
Accounting & Taxation
Accounting guidelines and disclosures for interest rate derivatives
Tax treatment of derivatives transactions under Indian tax laws
Code of Conduct & Investor Protection
SEBI's Code of Conduct for brokers, investor grievance redressal mechanisms, and the significance of KYC and risk disclosures
Emphasises legal and ethical aspects, making compliance a central focus
The structure of the book is as follows:
Chapter-based Format – Ten carefully arranged chapters, each covering a core aspect of interest rate derivatives
Conceptual Breakdowns & Summaries – Every chapter concludes with key takeaways and concise summaries for quick revision
Examples & Sample Questions – Interspersed throughout to reinforce learning and mirror the type of questions faced in the actual certification exam
Practical Caselets & Exercises – Provide hands-on practice in calculating yields, margins, and settlements, bridging theory with practical application
Regulatory Extracts & References – Cites important sections from SEBI regulations, RBI guidelines, and relevant statutes for easy reference