Page 202 - DCOM510_FINANCIAL_DERIVATIVES

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Unit 13: Regulatory Framework

Unit 13: Regulatory Framework Notes

CONTENTS

Objectives
Introduction
13.1 Regulation for Derivatives Trading
13.2 L. C. Gupta Committee Report
13.3 J. R. Varma Committee Report
13.3.1 Estimation of Volatility (Clause 2.1)

13.3.2 Calendar Spreads (Clause 2.2)
13.3.3 Trader Net Worth (Clause 2.3)
13.3.4 Margin Collection and Enforcement (Clause 2.4)
13.3.5 Clearing Corporation (Clause 2.5)

13.3.6 Position Limit (Clause 2.6)
13.3.7 Margining System (Clause 3.1)
13.3.8 Initial Margin Fixation Methodology (Clause 3.2)
13.3.9 Daily Changes in Margins (Clause 3.3)
13.3.10 Margining for Calendar Spreads (Clause 3.4)

13.3.11 Margin Collection and Enforcement (Clause 3.5)
13.3.12 Transparency and Disclosure (Clause 3.6)
13.4 Securities Contracts (Regulation) Act
13.4.1 Recognition of stock exchanges

13.4.2 Contracts in Securities
13.4.3 Listing of Securities
13.4.4 Securities Contracts (Regulation) Rules, 1957
13.5 Summary
13.6 Keywords

13.7 Review Questions
13.8 Further Readings

Objectives

After studying this unit, you should be able to:

Discuss about the regulation for derivatives trading;
Explain the L. C. Gupta committee report;
Describe the J. R Varma committee report;
Explain the Securities Contracts (Regulation) Act.

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