NZX Derivatives Adviser study guide
NZX Derivatives Adviser · Work through your exam, one topic at a time.
The NZX Derivatives Adviser credential is a New Zealand market qualification for people who advise retail or wholesale clients on exchange-traded derivatives, or who supervise or oversee that advice. It signals that the holder understands how futures and options work mechanically, how they are margined and cleared through a central counterparty, how they are priced off the underlying, and - critically - what conduct and disclosure obligations attach to recommending them. The NZX Derivatives Adviser study guide has 8 sections and about 2,484 words.
01Regulatory Framework and Market Conduct
Derivatives advice and dealing in New Zealand sit under the Financial Markets Conduct Act 2013 (FMC Act). Derivatives are financial products, so the FMA is the conduct regulator, while NZX operates the licensed derivatives market and NZX Clearing provides central clearing.
320 words, about 2 min02Derivatives Fundamentals and Product Types
Forwards, futures, options and swaps all derive value from an underlying. Futures are standardised, exchange-traded and cleared, with symmetric obligations: both parties can gain or lose.
346 words, about 2 min03Futures and Options Mechanics
An order is entered, matched and novated to the clearing house. The position is marked to market daily, with variation margin paid or received.
333 words, about 2 min04Margin, Clearing and Settlement
NZX Clearing acts as central counterparty, standing between buyer and seller through novation. This reduces bilateral counterparty risk but concentrates default management in the clearing house.
283 words, about 1 min05Pricing, Valuation and Cost of Carry
Futures are priced from the spot price plus the cost of carry less income. For a financial asset, a common continuous-compounding formula is F = S × e^((r − q)T), where r is the risk-free rate, q is the dividend or income yield and T is time to expiry.
303 words, about 2 min06Risk Management and Hedging Strategies
Start with the exposure: what price, currency, rate or index drives the loss? Then choose the instrument, direction, tenor and hedge ratio.
297 words, about 1 min07Client Suitability, Disclosure and the Advice Process
The FMC Act and the Code of Professional Conduct require advisers to treat clients fairly, act with integrity, give suitable advice and manage conflicts. A FAP must ensure its advisers are competent and properly supervised.
292 words, about 1 min08Market Integrity, Trading Conduct and Ethics
The FMC Act prohibits insider trading and market manipulation. Manipulation includes false or misleading conduct, wash trades, pre-arranged trading outside market rules, spoofing, layering and marking the close.
310 words, about 2 min