NISM CERTIFICATION EXAMINATION
Commodity Derivatives
Prepare for NISM-Series-XVI Commodity Derivatives with structured learning covering commodity markets, futures, options, commodity indices, hedging, trading strategies, trading mechanisms, clearing and settlement, risk management, regulations, taxation and investor protection.
Prepare for the NISM-Series-XVI: Commodity Derivatives Certification Examination with structured classroom training at Chart Education. Learn commodity markets, commodity futures and options, commodity indices, hedging and trading strategies, trading mechanisms, clearing and settlement, risk management, regulatory requirements, accounting, taxation and investor protection through concept-based learning, practical examples, question practice and mock tests.
NISM describes the examination as a common minimum knowledge benchmark for relevant persons functioning as approved users and sales personnel of trading members in the commodity-derivatives segment.
EXAM DURATION
2 Hours
MAXIMUM MARKS
100
PASSING MARKS
60%
NEGATIVE MARKING
25%
QUESTIONS
100
Detailed Syllabus
NISM-Series-XVI: Commodity Derivatives — Detailed Syllabus
The NISM-Series-XVI: Commodity Derivatives Certification Examination covers commodity markets, commodity futures and options, commodity indices, trading strategies, trading mechanisms, clearing and settlement, risk management, accounting, taxation, regulations and investor protection.
The current NISM curriculum contains 10 units.
Unit 1 — Introduction to Commodity Markets
History of commodity trading
Evolution of commodity exchanges
Spot and derivatives trading in commodities
Electronic spot markets
Physical spot markets
Economic functions of derivatives markets
Forwards, futures, options and swaps
Major commodities traded on derivatives exchanges in India
Participants in commodity derivatives markets
Commodity trading compared with other financial assets
Commodity-market ecosystem
Factors affecting commodity prices
Commodity options
Derivatives on commodity indices
Unit 2 — Commodity Futures
Introduction to commodity futures
Futures characteristics
Forwards versus futures
Cost-of-carry model
Convergence of spot and futures prices
Fair value of futures contracts
Convenience yield
Commodity futures versus commodity forwards
Futures payoff profiles
Long futures position
Short futures position
Spot-price polling
Final settlement price
Tick size
Profit/loss per contract from tick movements
Unit 3 — Commodity Options
Introduction to commodity options
Option terminology
Strike price
Spot price
Option premium
Lot size
Intrinsic value
Time value
Option payoff profiles
Determinants of option premium
Factors affecting call and put prices
Option-pricing models
Option Greeks
Delta
Gamma
Theta
Vega
Rho
Moneyness
ITM
ATM
CTM
OTM
Put-call parity
Options on commodity futures
Options on goods
Unit 4 — Commodity Indices
Meaning and purpose of commodity indices
Important commodity-market indices
Indian and international commodity indices
Index construction
Index constituents
Trading in commodity-index futures
Uses of index futures
Trading in index options
Applications of commodity-index derivatives
Unit 5 — Uses of Commodity Derivatives
Hedging
Long hedge
Short hedge
Speculation
Arbitrage
Spread trading
Inter-commodity spreads
Intra-commodity spreads
Basis
Strengthening and weakening of basis
Basis risk
Contango
Backwardation
Commodity-option strategies
Covered option positions
Spread strategies
Straddle
Strangle
Hedging using commodity-index derivatives
Trading using commodity-index derivatives
Arbitrage using commodity-index derivatives
Hedging-strategy disclosure norms
Unit 6 — Trading Mechanism
Membership on commodity derivatives exchanges
Exchange trading systems
Fully automated screen-based trading
Introduction to algorithmic trading
Trading hours for different commodity categories
Contract trading parameters
Delivery process
Selection criteria for commodities traded on derivatives exchanges
Commodity-derivative contract specifications
Order types
Price-related order conditions
Time-related order conditions
Order modification and cancellation
Tracking commodity futures and options prices
Trading costs
Brokerage
Exchange transaction charges
SEBI turnover fees
Stamp duty
GST
STT and other applicable costs
Permitted market participants
Exchange disclosures
Unit 7 — Clearing, Settlement and Risk Management
Clearing corporations
Clearing and settlement process
Delivery process
Compulsory delivery
Option to deliver
Entities involved in clearing and settlement
Clearing members
Clearing banks
Custodial services
Repositories
Warehouses
Electronic warehouse-receipt systems
Premium and discount
Seller delivery default
Buyer default
Physical delivery
Counterparty risk
Principal risk
Market-integrity and surveillance risk
Operational risk
Legal risk
Systemic risk
Position limits
Open-position computation
Capital adequacy
Online monitoring
Offline surveillance
Margin requirements
Price bands and daily price limits
Settlement Guarantee Fund
Investor Protection Fund
SPAN margin
Initial margin
Extreme loss margin
Mark-to-market margin
Additional and special margins
Concentration margin
Tender-period and delivery-period margins
Devolvement margin
Lean-period margin
Pre-expiry margin
Cross-margining
Procedures for index futures and options
Raising bills for delivery
Cyber Security and Cyber Resilience Framework
Unit 8 — Accounting and Taxation
Accounting aspects of commodity derivatives
ICAI guidance on accounting treatment of derivative transactions
Presentation in financial statements
Hedge accounting
Financial-statement disclosures
Accounting for options contracts
Taxation of commodity-derivative transactions
Commodity Transaction Tax
Stamp duty
SEBI turnover fees
GST
Unit 9 — Legal and Regulatory Environment
Regulatory structure of the commodity market
Role of the Central Government
Role of SEBI
Role of commodity exchanges
Securities Contracts (Regulation) Act, 1956
Securities and Exchange Board of India Act, 1992
Other regulatory norms applicable to commodity derivatives
Unit 10 — Code of Conduct and Investor Protection Measures
SEBI's Code of Conduct for brokers
Risk disclosure to clients
KYC
Importance of client risk disclosure
Risks faced by commodity-derivatives investors
KYC documents
Suspicious Transaction Reporting
Financial Intelligence Unit
Investor grievance-redressal mechanism
Rights and obligations of members and clients
Investor do's and don'ts in commodity derivatives
Important Note
Commodity-derivatives regulations, taxation provisions, exchange rules, contract specifications and examination information may change. Candidates should verify the latest information published by NISM before appearing for the examination.
Examination Pattern
NISM-Series-XVI Commodity Derivatives — Examination Pattern
Total Questions: 100
Total Marks: 100
Duration: 2 Hours
Passing Score: 60%
Negative Marking: 25% of the marks assigned to each incorrect answer
Question Structure
The examination consists of:
100 Multiple Choice Questions
100 questions
1 mark per question
Total 100 marks
2-hour examination duration
Preparation Focus
Candidates should develop understanding of:
Commodity markets
Commodity futures
Commodity options
Commodity indices
Hedging
Speculation
Arbitrage
Spread trading
Basis and basis risk
Trading mechanisms
Clearing and settlement
Margining and risk management
Regulatory framework
Accounting and taxation
Investor protection
NISM confirms the current 100-question, 100-mark, 2-hour structure with 60% passing and 25% negative marking.
Preparation Approach & Career Relevance
Commodity Derivatives — Preparation & Career Relevance
Why Prepare for NISM-Series-XVI?
The NISM-Series-XVI examination develops knowledge of commodity markets and exchange-traded commodity derivatives, including futures, options, commodity indices, hedging, trading strategies, clearing and settlement, risk management and the regulatory environment.
Chart Education Preparation Approach
Our preparation approach follows:
Learn → Understand → Practise → Analyse → Revise → Mock Test → Improve
Preparation can include:
Chapter-wise concept learning
Commodity-market examples
Futures payoff calculations
Options payoff calculations
Option Greeks
Commodity-index concepts
Hedging examples
Speculation and arbitrage strategies
Spread trading
Basis analysis
Clearing and settlement
Margin and risk-management concepts
Regulatory and compliance topics
Numerical and application-based questions
Detailed answer explanations
Full-length mock tests
Final revision
Chapter-Wise Practice
Chart Education's preparation system includes:
40 practice questions per chapter
Answers with explanations
Chapter-wise performance review
Numerical and application-based practice
20 full-length mock tests
Final revision
Practice questions created by Chart Education are original educational material and are not represented as actual NISM examination questions.
Career Relevance
Knowledge covered by this examination can be relevant to learners and professionals interested in:
Commodity Derivatives
Commodity Trading
Derivatives Trading
Risk Management
Trading Operations
Commodity-Market Operations
Capital Markets
Financial Services
Clearing and Settlement
NISM identifies Series XVI as a common minimum knowledge benchmark for certain approved users and sales personnel of trading members in the commodity-derivatives segment. Interested students, professionals and other individuals can also take the examination.
Preparation for Organisations
Structured NISM examination preparation can also be discussed for organisations and institutions with relevant financial-market teams or participants.
Potential organisational audiences include:
Commodity brokers
Commodity-trading organisations
Financial-services companies
Derivatives teams
Fintech organisations
Colleges and educational institutions
Organisations can contact Chart Education regarding team-based NISM examination preparation and customised training requirements.
Important Note
The NISM examination is conducted by NISM, and the NISM certification is issued by NISM to candidates who successfully meet the applicable examination requirements.
Candidates should verify the latest examination pattern, syllabus, eligibility and regulatory requirements directly with NISM before appearing for the examination.