Project on Futures and Options
PROJECT REPORT
ON
“TRADING & CLEARING MECHANISM & REGULATORY FRAMEWORK FOR FUTURES AND OPTIONS”
SUBMITTED BY
(10018, 10028, 10040, 10073)
SUMITTED
TO
PROF. Dr SAMPADA KAPSE.
PGDM PROGRAMME
(YEAR: 2010-12)
TOLANI INSTITUTE OF MANAGEMENT STUDIES
ADIPUR
Overview
TRADING MECHANISM
In Indian context the futures & options traded on NSE is called NEAT-F&O trading system.
Entities involved in trading system are:
1. Trading members.
2. Clearing members.
3. Professional clearing members.
4. Participants.
CLEARING MECHANISM
National Securities Clearing Corporation Limited (NSCCL) looks after all clearing and settlement of trades executed on futures and options on NSE
The three main activities of clearing and settlement process are:
• Clearing.
• Settlement.
• Risk Management.
The clearing mechanism essentially involves working out open positions and obligations of clearing (self-clearing/trading-cum-clearing/professional clearing) members. This position is considered for exposure and daily margin purposes.
REGULATORY FRAMEWORK
Securities Contracts Act 1956 of SEBI Act regulates the trading of derivatives in India.
A committee was forms by SEBI to develop the appropriate regulatory framework for derivative trading in India.
TRADING MECHANISM
1. Proprietary orders should be identified as “Pro” and those of clients should be identified as “Cli”.
2. The maximum brokerage chargeable by a trading member in relation to trades effected in the contracts admitted to dealing on the F&O Segment of NSE is fixed at 2.5% of the contract value exclusive of statutory levies.
3. What is Day order?
A day order, as the name suggests is an order which is valid for the day on which it is entered. If the order is not executed during the day, the system cancels the order automatically at the end of the day.
4. What is Immediate or Cancel (IOC)?
An IOC order allows the user to buy or sell a contract as soon as the order is released into the system,
ON
“TRADING & CLEARING MECHANISM & REGULATORY FRAMEWORK FOR FUTURES AND OPTIONS”
SUBMITTED BY
(10018, 10028, 10040, 10073)
SUMITTED
TO
PROF. Dr SAMPADA KAPSE.
PGDM PROGRAMME
(YEAR: 2010-12)
TOLANI INSTITUTE OF MANAGEMENT STUDIES
ADIPUR
Overview
TRADING MECHANISM
In Indian context the futures & options traded on NSE is called NEAT-F&O trading system.
Entities involved in trading system are:
1. Trading members.
2. Clearing members.
3. Professional clearing members.
4. Participants.
CLEARING MECHANISM
National Securities Clearing Corporation Limited (NSCCL) looks after all clearing and settlement of trades executed on futures and options on NSE
The three main activities of clearing and settlement process are:
• Clearing.
• Settlement.
• Risk Management.
The clearing mechanism essentially involves working out open positions and obligations of clearing (self-clearing/trading-cum-clearing/professional clearing) members. This position is considered for exposure and daily margin purposes.
REGULATORY FRAMEWORK
Securities Contracts Act 1956 of SEBI Act regulates the trading of derivatives in India.
A committee was forms by SEBI to develop the appropriate regulatory framework for derivative trading in India.
TRADING MECHANISM
1. Proprietary orders should be identified as “Pro” and those of clients should be identified as “Cli”.
2. The maximum brokerage chargeable by a trading member in relation to trades effected in the contracts admitted to dealing on the F&O Segment of NSE is fixed at 2.5% of the contract value exclusive of statutory levies.
3. What is Day order?
A day order, as the name suggests is an order which is valid for the day on which it is entered. If the order is not executed during the day, the system cancels the order automatically at the end of the day.
4. What is Immediate or Cancel (IOC)?
An IOC order allows the user to buy or sell a contract as soon as the order is released into the system,