Currency Derivatives is a comprehensive workbook designed to thoroughly understand the currency derivatives market, mainly focusing on exchange-traded derivatives in India. The primary objective of this book is to establish a common minimum knowledge benchmark for professionals engaged in the currency derivatives segment. It equips readers with a comprehensive understanding of the dynamics of currency markets, the nuances of trading strategies using currency futures and options, and the detailed mechanisms of trading, clearing, settlement, and risk management. Additionally, it thoroughly examines the regulatory environment governing currency derivatives in India, providing a complete picture of the operational and legal landscape. The key learning outcomes of this book are as follows: • Fundamentals of Currency Markets – Gain a solid foundation in the basics of currency markets, including the unique characteristics of the Indian market, major currencies, and the factors influencing exchange rates • Trading, Clearing, and Settlement – Understand the end-to-end processes involved in trading, clearing, and settlement of exchange-traded currency derivatives, including risk management protocols and the roles of key market participants • Regulatory Insight – Acquire detailed knowledge of the regulatory framework, including SEBI and RBI guidelines, the Securities Contracts (Regulation) Act, and the Foreign Exchange Management Act, which govern the functioning of currency derivatives markets in India. This workbook is designed for professionals in the currency derivative segment, including traders, analysts, finance professionals, and regulatory personnel. It is also helpful for students, academicians, and anyone seeking to improve their understanding of the currency derivatives market in India. The Present Publication is the June 2024 workbook version developed in collaboration with the Certification Team of the NISM and Mr Amit Singhal of Cube Edugains Pvt. Ltd. It is published exclusively by Taxmann for NISM Certification Examination I [Currency Derivatives], with the following noteworthy coverage: • [Introduction to Currency Markets] This chapter introduces the history of foreign exchange markets, highlighting the evolution of major currencies and currency pairs. It covers exchange rate arithmetic and discusses the impact of various economic factors and indicators on currency prices, providing a foundational understanding of market dynamics • [Foreign Exchange Derivatives] This chapter discusses the core concepts of derivatives, including their economic functions and growth drivers. It contrasts exchange-traded derivatives with OTC derivatives, highlighting the benefits and challenges associated with each, and explains why exchange-traded currency derivatives were introduced in India • [Exchange Traded Currency Futures] This chapter enables the reader to explore the specifics of currency futures, including their definitions, contract specifications, and pricing models. It provides an analysis of interest rate parity and the advantages of futures over forwards and includes practical examples and pay-off charts to illustrate how futures contracts work • [Exchange Traded Currency Options] This chapter covers the basics of currency options, including the differences between futures and options, the various styles of options, and concepts like moneyness and implied volatility. It also explains option pricing methodologies and includes detailed pay-off diagrams to aid in understanding option trading strategies • [Strategic Use of Currency Derivatives] This chapter discusses the strategic applications of currency derivatives, including hedging, speculation, and arbitrage. It explores how different market participants utilize these instruments, providing practical insights into trading spreads and other strategies to manage risk and optimize returns • [Trading Mechanisms] This chapter makes the reader understand the operational aspects of trading in exchange-traded currency derivatives, including the structure of trading systems, order management processes, and risk management measures. It also discusses trading costs, price limit circuit filters, and the role of various entities in the trading ecosystem • [Clearing, Settlement, and Risk Management] This chapter provides a detailed overview of the clearing and settlement processes, including the interoperability of clearing corporations, margin collection requirements, and the operation of the Core Settlement Guarantee Fund. It emphasizes the importance of risk management in the clearing and settlement cycle • [Regulatory Framework] This chapter details the regulatory environment with comprehensive coverage of the laws and guidelines that govern exchange-traded currency derivatives. It includes detailed discussions on the Securities Contracts (Regulation) Act, the Foreign Exchange Management Act, and the specific SEBI and RBI regulations relevant to the currency derivatives market • [Accounting and Taxation] This chapter addresses the accounting guidelines, disclosure requirements, and taxation aspects of currency derivatives, providing practical guidance on compliance and financial reporting for these instruments • [Code of Conduct and Investor Protection Measures] This chapter discusses the ethical standards and conduct expected of market participants, as outlined by SEBI's code of conduct for brokers. It also covers investor protection mechanisms, including grievance redressal, the operation of investor protection funds, and disclosure requirements for clients

This book covers the basics of interest rate derivatives, trading strategies using interest rate derivatives, clearing, settlement and risk management, and the regulatory environment in which the interest rate derivatives markets operate in India. This book aims to create a common minimum knowledge benchmark for the approved users and sales personnel of the ‘Trading Members’ registered in the Currency Derivatives Segment of a recognised stock exchange and trading in Interest Rate Derivatives. It will also be helpful to those who want to have a better understanding of various products available in the exchange-traded interest rate derivatives markets in India. The Present Publication is the March 2022 workbook version, published exclusively by Taxmann for NISM Certification Examination IV [Interest Rate Derivatives], with the following noteworthy features: • [Know the Basics] of fixed income securities markets and specifically interest rate derivative market in India and the developed world • [Understand] the following: o The analytical framework required for the Bond Futures market in India, along with trading and hedging strategies involved o 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 derivative markets operate in India • [Sample Questions] This book also features sample questions with answers Coverage of this book includes: • Introduction to Interest Rate, Interest Rate Instruments and Fixed Income Market • Interest Rate Derivatives • Exchange Traded Interest Rate Futures • Exchange Traded Interest Rate Options • Strategies using Exchange Traded Interest Rate Derivatives • Trading Mechanism in Exchange Traded Interest Rate Derivatives • Clearing, Settlement and Risk Management in Exchanged Traded Interest Rate Derivatives • Regulatory Framework for Exchange Traded Interest Rate Derivatives • Accounting and Taxation • Code of Conduct and Investor Protection Measure

"In the wake of the global financial crisis that began in 2008, offers a systematic overview of recent developments in regulatory frameworks in advanced and emerging-market countries, outlining challenges to improving regulation, markets, and access in developing economies"--Provided by publisher.

This guidance note was prepared by International Monetary Fund (IMF) and World Bank Group staff under a project undertaken with the support of grants from the Financial Sector Reform and Strengthening Initiative, (FIRST).The aim of the project was to deliver a report that provides emerging market and developing economies with guidance and a roadmap in developing their local currency bond markets (LCBMs). This note will also inform technical assistance missions in advising authorities on the formulation of policies to deepen LCBMs.

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The April 2012 Global Financial Stability Report assesses changes in risks to financial stability over the past six months, focusing on sovereign vulnerabilities, risks stemming from private sector deleveraging, and assessing the continued resilience of emerging markets. The report probes the implications of recent reforms in the financial system for market perception of safe assets, and investigates the growing public and private costs of increased longevity risk from aging populations.

The Global Financial Stability Report examines current risks facing the global financial system and policy actions that may mitigate these. It analyzes the key challenges facing financial and nonfinancial firms as they continue to repair their balance sheets. Chapter 2 takes a closer look at whether sovereign credit default swaps markets are good indicators of sovereign credit risk. Chapter 3 examines unconventional monetary policy in some depth, including the policies pursued by the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank, and the U.S. Federal Reserve.