Explanation:

One of the reasons the local currency depreciates is due to out flow of foreign capital.

So by increasing the limits of Foreign Portfolio Investor (FPIs) holdings in stock market, the country can attract more foreign capital.

Explanation:

A derivative product is defined by the fact that its value is derived from the value of one or more underlying variables. It can be related to various financial instruments such as equities, currencies, or commodities. Options A, B, and C provide additional information about derivatives but do not capture the fundamental definition of a derivative as a product whose value is derived from underlying variables.

Explanation:

In interbank market, currency prices are quoted with two way price – the prices quoted for buying is called bid price and the price quoted for selling is called as offer or ask price.

These prices are always from the perspective of the market maker and not from the perspective of the price taker.

(The difference between bid and offer price is called as ‘spread’)

Explanation:

For exchange traded derivative contracts, the Clearing Corporation acts as a central counterparty to all trades.

Explanation:

Settlement means actual pay in or pay out to settle the contract.

The settlement could be of mark to market settlement which happens on daily basis or could be final settlement which happens at the expiry of the contract.

Explanation:

Explanation:

In the first leg of the spread trade : Bought at 60.20 and sold at 61.10. Here he has made a profit of 0.90

To reverse his position – In the second leg of his trade he sold at 59.90 and bought at 60.50. Here he has made a loss of -0.60

So overall he has made a profit of 0.90 – 0.60 = 0.30 X 1000 (lot size of USDINR)

= Rs 300 profit

Explanation:

The rate will be higher as the difference in interest rates will be added to the future price.

Explanation:

An order to buy a specified quantity of a security at or below a specified price or to sell it at or above a specified price is known as a Limit Price Order. This order type allows traders to set a specific price at which they are willing to buy or sell a security. The execution of the order occurs only if the market price reaches or surpasses the specified limit price.

Explanation:

In the case of the USDINR currency futures contract the tick size shall be 0.25 paise or 0.0025 Rupee. To demonstrate how a move of one tick affects the price, imagine a trader buys a contract (USD 1000 being the value of each contract) at Rs 67.7500. One tick move on this contract will translate to Rs 67.7475 or Rs 67.7525 depending on the direction of market movement.

The value of one tick on each USDINR contract is Rupees 2.50 (which is 1000 X 0.0025). So if a trader buys 5 contracts and the price moves up by 4 ticks, he makes Rs 50 (= 5 X 4 X 2.5)

Explanation:

The currency futures contracts on the SEBI recognized exchanges have one-month, two-month, and three-month up to twelve-month expiry cycles.

Therefore, these exchanges will have 12 contracts outstanding at any given point in time.

Explanation:

In order to avoid building up of huge open positions, the regulator has specified the maximum allowable open position limit across all members of the Exchange.

This monitoring is for both client level positions (based on the unique client code) and for trading member level positions.

So even at client level, the open position limits is as per fixed guidelines.

Explanation:

The difference between spot price and future price is usually the cost of carry (interest) and other factors.

On the expiry day, the cost of carry is almost nil, so the prices of future and spot tend to merge.

Explanation:

GDP represents the total market value of all final goods and services produced in a country during a given year. A GDP growth rate higher than expected may mean relative strengthening of the currency of that country, assuming everything else remaining the same.

More the development of a country, more will be the foreign capital inflows – leading to appreciation of the local currency.

Explanation:

Exchanges may not take up the following types of complaints

a. Complaints in respect of transactions which are already subject matter of Arbitration proceedings,

b. Complaints involving payment of funds and transfer of securities to entities other than Trading Member,

c. Claims for mental agony/harassment and expenses incurred for pursuing the matter with the ISC,

d. Claims for notional loss, opportunity loss for the disputed period or trade,

e. Complaints pertaining to trades not executed on the Exchange by the complainant,

f. Claims of authorized persons for private commercial dealings with the trading member,

g. Claims relating to transactions which are in the nature of loan or financing which are not within the framework defined by the Exchange.

Explanation:

To maintain governance and avoid conflicts of interest, it is a common regulatory practice that no trading or clearing member should be allowed simultaneously to be on the Governing Council of the currency futures segment and the cash/equity derivatives segment. This separation helps ensure fair and unbiased decision-making in both segments.

Explanation:

Arbitrageurs lock in a profit by simultaneously entering opposite side transactions in two or more markets.

Spread Trading (Calendar Spread) means risk off-setting positions in contracts expiring on different maturity dates in the same underlying taken simultaneously.

Explanation:

RBI-SEBI Standing Technical Committee on Exchange Traded Currency recommends product design, risk management and membership norms for currency futures.

Explanation:

When a Trading Member requires the facility of using a ‘Pro-account’ through trading terminals from more than one location, such Trading Member shall request the Exchange stating the reason for using the ‘Pro-account’ at multiple locations.

The Exchange may, on a case-to-case basis after due diligence, consider extending the facility of allowing the use of ‘Pro-account’ from more than one location.

Explanation:

To benefit from a bullish trend, Mr. Doshi has two options to use ie. either Short a Put or go long on a Call.

Shorting a put has limited benefits as profits are limited. As Mr. Doshi is expecting a strong bull trend, the best option is to long a call and get the full profits of the strong upward move.