Prudential norms for non-benchmark index derivatives
Under SEBI's circular of 30 October 2025 — a minimum of 14 constituents, a top constituent weight of no more than 20 per cent, a combined top-three weight of no more than 45 per cent, and a descending weight structure.
This one is not written up yet
The definition above is the short version. A full explanation — how it works, a worked example and the exam traps — is still being written. In the meantime the chapter below covers it in context.
Written up from the same chapter
- Exchange Traded FundA mutual fund scheme whose units are listed and traded on a stock exchange like a share, so you transact at live prices through the day instead of at one end-of-day NAV.
- Impact costThe percentage by which a market order's actual execution price degrades against the ideal price — the mid-point of the best bid and the best offer — and so the real cost of trading in size.
- LiquidityThe degree of ease with which you can turn an investment back into cash at a fair value — one of the three pillars of investing, alongside safety and return.
Where this is taught
Free preparation for NISM Series V-D← All terms