Objectives

Derivative instruments lie at the forefront of modern financial markets.  Long-established as exchange traded instruments, the world of OTC or over-the-counter derivatives is larger by value than its exchange counterpart although pressures exist today to embrace the OTC market into exchange traded structures more than ever before.  An understanding of how these markets work and the products which comprise them is essential to anyone who is involved in trading and investment.

This course will explain the derivatives industry and raise the level of understanding with respect to trading, operations and the risks involved.

Course Content

• What is a derivative?  Why are they used?
• Trading strategies and risk profiles
• Definitions of futures, options, swaps and other derivatives
• Examples of contract specifications and underlying assets
• Terminology used in trading and operations within futures and options
• Examples of types of swaps
• Bond, equity, currency and interest rate derivatives
• Definition of credit derivatives, structured products and exotics
• Examples of the use of derivative products
• Trading systems
• Exchanges and OTC environments compared
• Statistics showing global trading
• The role and responsibility of clearing houses and the CCP
• Margining – rationale and methodology, types of margin
• Providing cover for margin
• Close out, settlement and delivery
• Global clearing and prime brokerage
• Operational issues, risks and controls

ALAN BURR  - 2009