Interest Rate Derivatives

Frequently Asked Questions

1. Who can take NISM-Series-IV: Interest Rate Derivatives Certification Examination?

The following persons can take NISM-Series-IV: Interest Rate Derivatives Certification Examination:

  1. Approved users and sales personnel of the ‘Trading Members’ who are registered as such in the Currency Derivatives Segment of a recognized stock exchange and trading in Interest Rate Derivatives.
  2. Interested students/professionals
  3. Any other individuals

2. For whom is this examination mandated?

Please refer to NISM Notification NISM/Certification/Series-IV: IRD/2010/1 dated May 18, 2010 (in the ‘Circulars’ section). NISM has specified this examination to be the requisite standard for the approved users and sales personnel of the ‘Trading Members’ who are registered as such in the Currency Derivatives Segment of a recognized stock exchange and trading in Interest Rate Derivatives..


3. How can I register for NISM-Series-IV: Interest Rate Derivatives Certification Examination?

Candidates can register with any of the following Test Administrators.

1. National Institute of Securities Markets (NISM)

For registrations candidates may visit any of the above websites.

After successful registration, candidates may select a test centre, date and time slot of their choice on the Test Administrator website. Candidates are required to follow further instructions available on the Test Administrator websites.

4. What is the fee structure?

The fees for "NISM-Series-IV: Interest Rate Derivatives Certification Examination" is Rupees One Thousand Five Hundred only (Rs. 1500/-).

5. What is the assessment structure?

The examination will be of 100 marks, will have 100 questions, and should be completed in 2 hours. There will be negative marking of 25% of the marks assigned to a question. The passing score for the examination is 60%.

6. Is there a study material available for preparing for this examination?

You will receive a soft copy of the workbook/study material after enrolment for the examination. For non-receipt of soft copy of the workbook/study material, you may contact the respective Test Administrator:

NISM: This email address is being protected from spambots. You need JavaScript enabled to view it.

7. Do I have to pay for the study material?

You will receive a soft copy of the workbook/study material free of cost after enrolment for the examination.Candidate can buy NISM workbooks online through Taxmann Publications Private Ltd.
Visit to place your orders for NISM workbooks.
If you prefer to order by phone , please call your nearest store directly to place your order .Click here to get the details of your nearest store.

8. How can I appear for NISM IRD mock test? Where do I get sample questions for NISM Interest Rate Derivatives Certification Examination?

Click here to take a mock test.

9. I have passed NISM Interest Rate Derivatives Certification Examination, when will I receive the certificate?

Only the candidates who have produced their Income Tax Permanent Account Number (PAN) during registration would receive the NISM Certificate within two weeks of appearing for the examination.

Candidates who produced other identification proofs would not receive the NISM certificate. They would receive only the temporary mark sheet at the end of the examination.

10. I have not provided my PAN information at the time of taking the certification examination. How do I obtain the certificate?

Candidates who have not provided their PAN information during registration may furnish their PAN details to the Test Administrator they have registered with anytime after taking the examination.  After receiving and verifying PAN details, the candidate will receive the certificate from the Test Administrator they have registered with.  No additional payments are necessary for obtaining the certificate.

11. I have passed NISM Interest Rate Derivatives Certification Examination and also provided PAN details, however I have not received a certificate. Whom should I contact?

For non-receipt of certificate contact the test administrator you have registered with for this examination. The respective email ids are given below:

NISM: This email address is being protected from spambots. You need JavaScript enabled to view it.

12. What is the validity period of the certificate?

The certificate will be valid for 3 years from the date of the examination.

13. How do I renew my certificate?

To renew your current certificate, you need to appear for NISM CPE for Interest Rate Derivatives or successfully pass the NISM Interest Rate Derivatives Certification Examination before the expiry of such certificate.

14. Can I request for re-evaluation of NISM Certification Examinations?

NISM Policy on Re-evaluation of performance of candidates appearing for Certification Examination and resolution of doubts about the questions forming part of such examination, if any.

“No re-evaluation of the performance of candidates appearing for Certification Examination conducted by NISM (Mandatory & Non-Mandatory examination) is permitted since the assessment of answers, with respect to Certification Examinations questions which are in the nature of selection of only one correct answers from multiple choices offered, is carried out in an objective manner by in-built system architecture created for Certification Examination without any scope for human intervention and subjectivity element.


Also, considering the examination structure, no disclosure of the questions and/or answers is permitted as it will violate the confidentiality of the question bank, which is the essence of the examination.


In view of the above, no communication regarding re-evaluation, etc. will be entertained/serviced by NISM.”

Subject to the above, request/s received from a candidate for resolution of doubts about a question forming part of such examination will be considered as per the following policy.

(1)   Candidate’s request/s will be considered only when he/she specifically mentions particular question or two which he/she thinks contain errors.  Claims/ to recheck more than two questions shall normally be not permitted unless substantive material is provided by the candidate as to why he/she considers errors in such questions.  In no case, claim/s to recheck all the questions appeared in his/her question paper shall be entertained.

(2)   No request/s to disclose/discuss question/s and/or their answers shall be entertained as disclosure of the question/s will violate the essence of the question bank viz. breach the confidentiality/secrecy of the Question bank.

(3)   Only those request/s made on-the-spot (before leaving the test center) will be considered for verification.

(4)   When a valid request is received from a candidate at the Test Centre, it shall be forwarded by the respective TA to NISM. NISM’s team will look into claim relating to the contested question/s to verify whether there is a mistake in the question or answer.  If it is prima facie found that the question or answer contains a mistake, no score will be computed and consequently no score card will be issued then at the Test Centre.

(5)   Such matter will then be escalated with the question / answer to the Committee with the details of the nature of error, the correct version of the question or contested correct answer and system recognized correct answer.  The Committee, after due diligence and proper scrutiny, will arrive at a conclusion whether the claim made by a candidate in relation to a question or answer is right.  Such conclusion will be recorded in writing and put up for formal approval to the authority of NISM.

(6)   Score computation, kept in abeyance as per point 4, shall be carried based on the approval as per point – 5. Such score card will then be issued to the candidate by TA/NISM.

(7)   Even though NISM endeavors best efforts and  has put in place a robust mechanism to review its question bank intermittently, attributable to continuous changes taking place emanating from dynamics of market, encompassing products and features, and its regulatory framework, there is a possibility of inadvertently escaping some updation and/or escaping indirect impact on some question/answer.  Therefore, to take care of such eventuality, the above process of entertaining request from the candidate in relation to the question/answer is put in place.

(8)   The above policy and process will be subject to review from time to time and shall be binding and final in relation to any claim and/or matter when disposed off with the approval of the authority of NISM.

NISM-Series-IV: Interest Rate Derivatives Certification Examination

Test Objectives

Unit 1: Fixed-income or Debt Securities

1.1 Know about fixed-income securities and the economic role of debt markets

1.2 Know the classification of fixed-income securities based on cash flow pattern, tenor, etc.

1.3 Understand the difference between fixed-income security and fixed-return security

1.4 Differentiate between debt securities and equity securities, debt market and equity market as components of capital market

1.5 Explain the importance of debt market for the economic development of a country and know the relative size of debt and equity markets globally and in India

1.6 Know the primary and secondary markets for debt securities in India

Unit 2: Interest Rate – Introduction

2.1 Understand the concept of interest rate

2.2 Explain the importance of risk-free interest rate and differentiate between risk-free interest rate and risky interest rate

2.3 Understand term structure of interest rates (yield curve), its shape, shifts and interpretation

2.4 Understand the conversion of interest rate into interest amount: effect of payment frequency, compounding frequency, day count basis and business day adjustment

2.5 Explain the concept of accrued interest

Unit 3: Return and Risk Measures for Debt Securities

3.1 Define spot rate (or zero rate) and holding period return

3.2 Define and calculate various measures of return: coupon, current yield, yield-to-maturity

3.3 Describe the relation between spot rate, bond price and yield-to-maturity

3.4 Define and calculate various measures of risk: Macaulay Duration, Modified Duration, Rupee Duration, Price value of a basis point (PVBP) and Convexity

Unit 4: Interest Rate Derivatives

4.1 Define derivatives and discuss economic role of derivatives

4.2 Distinguish between bond derivatives and interest rate derivatives with specific reference to features and risks addressed by them

4.3 Differentiate between features of Over-The-Counter (OTC) and Exchange Traded derivatives

4.4 Timeline of derivatives markets in India

Unit 5: Contract Specification for Interest Rate Derivatives

5.1 Know the underlying assets of permissible interest rate derivative contracts in India

5.2 Know the market lot (contract amount), contract months, expiry dates of exchange traded derivatives contracts

5.3 Understand tick size and its relation to the minimum change in the contract value

5.4 Describe the procedure for determining the daily settlement price and final settlement price

5.5 Discuss the delivery aspects of interest rate derivatives contracts including conversion factor, invoice amount, cheapest-to-deliver bond

Unit 6: Trading, Clearing, Settlement and Risk Management

6.1 Describe in brief the process flow of clearing and settlement

6.2 Understand margining and mark-to-market

6.3 Understand the risk management measures like SPAN, value-at-risk and scenario analysis

6.4 Describe and differentiate the process of cash settlement and physical settlement

6.5 Understand the peculiarities of physical settlement in bond futures

6.6 Understand operational guidelines of exchanges

6.7 List and discuss various order types permissible on the exchanges

Unit 7: Regulations and compliance

7.1 Know the role of various regulators in bond and interest rate derivatives market

7.2 Discuss the restrictions and limits applicable to various categories of market participants

7.3 List the regulatory reporting requirements for RBI-supervised entities

7.4 Understand the role of FIMMDA in fixed income and derivatives markets in India

7.5 Briefly discuss the accounting aspects of interest rate derivatives

Unit 8: Trading and Hedging

8.1 Explain speculative / trading strategies with suitable examples

8.2 Explain Hedging strategies for managing interest rate risk in loans and bond investments

8.3 List and describe various risks associated with futures: basis risk, yield curve spread risk and market liquidity risk


The examination seeks to create a common minimum knowledge benchmark for persons working in the Interest Rate Derivatives market segment, in order to enable a better understanding of fixed income securities markets and interest rate derivative products, regulations and risks associated with the products and the exchange mechanisms of clearing and settlement.

Examination Objectives:

On successful completion of the examination the candidate should:

  • Know the basics of fixed income securities markets and specifically interest rate derivative markets in Indian and developed world.
  • Understand the analytical framework required for Bond Futures market in India along with trading and hedging strategies involved
  • Understand 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 derivatives markets operate in India.

Assessment Structure:

The NISM-Series-IV: Interest Rate Derivatives Examination will be of 100 marks, will have 100 questions, and should be completed in 2 hours. There will be negative marking of 25% of the marks assigned to a question. The passing score for the examination is 60%.

Test Details:


Name of Module: NISM-Series-IV: Interest Rate Derivatives Certification Examination

Fees (Rs.) Test Duration (in minutes) No. of Questions Maximum Marks Pass Marks* (%) Certificate # Validity (in years)
1500+ 120 100 100 60 3


NISM-Series-IV: Interest Rate Derivatives Certification Examination

(NISM-Series-IV:IRD Examination)

Curriculum (with effect from August 21, 2013)

I. Fixed-income or Debt Securities – Introduction

A. Financial Markets: Overview

B. Debt/ Fixed-income Securities : Introduction

C. Debt/ Fixed-income Securities : Classification

D. Fixed-income Securities vs. Fixed-return Securities

E. Debt Securities vs. Equity Securities

F. Relative Size of Debt and Equity Markets: Globally and in India

II. Interest Rate – Introduction

A. Concept of Interest Rate

B. Risk-free Interest Rate vs. Risky Rate

C. Term Structure of Rates: Shapes

D. Term Structure of Rates: Shifts

E. Conversion of Rate into Amount

F. Accrued Interest

III. Return and Risk Measures for Debt Securities

A. Return Measure: Spot Rate

B. Coupon, Current Yield and Yield-To-Maturity

C. Spot rate, Bond price and YTM

D. Risk Measures

IV. Interest Rate Derivatives

A. Derivatives: Definition and Economic Role

B. Interest Rate Derivatives

C. Over-The-Counter (OTC) vs. Exchange-Traded Derivatives

D. Derivatives Market in India

V. Contract Specification for Interest Rate Derivatives

A. Underlying Assets of Permissible Interest Rate Derivative Contracts in India

B. Market Lot / Contract Amount

C. Contract Months, Expiry Dates and Last Trading Day of Exchange Traded Derivatives

D. Price Quotation and Tick

E. Daily Settlement Price

F. Final Settlement Price

G. Delivery Aspects of Interest Rate Derivatives Contracts

VI. Trading, Clearing, Settlement and Risk Management

A. Operational Guidelines of Exchanges

B. Order Types and Execution

C. Spread Orders

D. Margining and Mark-To-Market (MTM)

E. Clearing and Settlement

F. Procedure for Delivery

VII. Regulations and compliance

A. Role of Various Regulators in Bond and Interest Rate Derivatives Market

B. Restrictions and Limits Applicable to Resident and Non-resident Investors

C. List the Regulatory Reporting Requirements

D. Accounting Aspects of Interest Rate Derivatives

VIII. Trading and Hedging

A. Speculative / Trading Strategies

B. Hedging Strategies

C. Basis Risk, Yield Curve Spread Risk and Market Liquidity Risk

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