the mechanics of derivatives and financial products
TRANSCRIPT
POSTGRADUATE CERTIFICATE DELIVERED BY DISTANCE LEARNING OVER 16
WEEKS
Learning partner of
THE MECHANICS OF
DERIVATIVES AND FINANCIAL PRODUCTS
WHAT YOU WILL LEARN This ground-breaking course will examine the rationale, mechanics and risks/rewards for investors in a variety of financial instruments which provide direct and indirect exposure to these asset classes. There will be a focus on the way in which these instruments function, the markets and platforms upon which they trade, and the motivations behind the selection of such instruments in constructing an investment portfolio. While securities such as shares, and bonds represent primary financial instruments of the major asset classes such as equities and fixed income, there will also be a comprehensive examination of the wide variety of derivative instruments which have grown rapidly in response to increased volatility in exchange rates, interest rates, commodity prices and the need to manage risks in a complex financial environment. Instruments that will be examined include options, futures, swaps, structured products, exchange traded funds and other collective investment vehicles. These will be considered from the perspectives of the hedger, the speculator and, on the sell side, from the perspective of the originators and structurers of these products. You have the opportunity to receive a Postgraduate Certificate from Middlesex University. This is the only course on this topic that offers you the chance to get this qualification. The course takes place over 16 weeks and consists of eight distance learning units. Every two weeks an additional unit will be released with the associated assessment so you can grasp your understanding before moving on to the next unit.
COURSE AT A GLANCE Unit 1 – Equities, global equity markets and indices Unit 2 – Fixed income securities Unit 3 – Money market securities, foreign exchange and settlement Unit 4 – Exchange traded funds and collective investment schemes Unit 5 – Exchange traded derivatives: futures and options Unit 6 – Key elements of swaps Unit 7 – Risk management with derivatives Unit 8 – Trading derivatives, hedging and investment strategies
COURSE LEADER CLIVE CORCORAN Clive Corcoran has been engaged in the finance and investment management sectors, on both sides of the Atlantic, for more than 25 years. After completing his education in the UK, Canada and the US, he co-founded and became the CEO of an investment management company based in the USA during the 1980’s and 90’s. The company provided wealth management and fiduciary services to a variety of international clientsHis own responsibilities included personalized business management, international tax planning and providing strategic financial advice to high net worth individuals. Since re-locating to the UK in 2000, he has continued, as an FCA registered investment adviser, to be engaged in providing strategic investment advice to private clients and pension funds. During recent years he has written several books on international finance, focusing on asset allocation and risk managementHe also has also been very actively involved in executive education on a global basis for finance professionals. He conducts workshops and in-house courses on a variety of topics including risk management, Basel III and capital adequacy, central banking, systemic risk, asset allocation techniques, credit risk, market risk and derivatives. Hear from the trainer himself: www.iff-training.com/VIDMSD
HOW YOU WILL LEARN • A new module is released every two weeks • You can study the units online, save them to your
computer or print them out • You set the pace for yourself • No need to travel or take time off work – cost effective • Apply the knowledge, skills and expertise to your work
straight away
POSTGRADUATE CERTIFICATE To make your studies more relevant and valuable, the course is validated by the Business School at Middlesex University at a Postgraduate Certificate level. For those wishing to receive a Postgraduate Certificate from Middlesex University, an additional marked assignment of 5000 words will need to be submitted, based on a continuing case study that runs throughout the duration of the course.
PRICE
* VAT may be payable depending on your location –
see online booking page for details
HOW TO APPLY Tel: +44 (0)20 7017 7190 Email: [email protected]
CUSTOMISED TRAINING IFF’s bespoke digital training solutions will help you address your specific key business challenges. The programme is designed for you, with content focusing on the issues you and your teams are facing. The fully branded digital course will be hosted by us, and unlike other online courses, your employees will receive a specialist qualification at the end of the programme from a London University.
• Tailored content - 100% targeted to cover your business needs
• No travel or time out of the office – 100% Distance Learning
• Value for money – train teams of staff at the same time • Risk free – we’ve been doing this for 30 years
We will meet you anywhere in the world. If you would like one of our consultants to talk about your needs in more detail or if you would like more information on our customised training solutions, please contact us on +44 (0)20 7017 7190 or email: [email protected]
COURSE INFORMATION DELIVERED BY DISTANCE LEARNING OVER 16 WEEKS
APPLY ONLINE HERE
UNIT 1 – EQUITIES, GLOBAL EQUITY MARKETS & INDICES
Unit Learning Aims and Objectives . A Understand the defining characteristics of financial
securities and their relationship to assets . Gain the ability to contrast the nature of financial securities
with the derivatives which are structured and dependent upon these underlying securities
. Increase your understanding of the role that equity plays in the capital structure of corporations
. Obtain a full comprehensive overview of different types of equities including warrants and CFDs,
. Enhance knowledge of the issuance of equities and the manner in which they are traded in contemporary markets
. Benefit from an ability to analyse relationship between the financial performance of companies and the behaviour of their share prices, dividends, management policy etc.
UNIT CONTENT • The differences between a security and a derivative
– fundamental financial claims – ownership of equity vs. a derivative claim which is contractually bound to the performance of an underlying or fundamental claim
• The principal types of equities – ordinary (common) shares – preference shares – convertible securities – ranking for dividends – liquidation priority
• Issuance of equities – stages of IPOs – private placements – secondary offerings – rights issues – role of underwriters
• Equity markets and trade execution • Order driven/quote driven platforms
– alternative trading venues – dark pools – order types – trade settlement
• Warrants, Covered warrants and Contracts for Difference (CFDs) – relative risks of warrants and covered warrants – mechanics of a CFD
• High Frequency Trading – market making – liquidity provisioning – flash crashes
• Equity valuation – dividend discounting models – financial ratios – fundamental analysis
• Historical overview of equity market returns – P/E ratios – comparison with returns on other asset classes – over-valuation indicators – risk premium – overview of Capital Asset Pricing Model (CAPM) and portfolio
theory
• Review of major equity indices – market classifications – major markets – emerging markets
UNIT 2 – FIXED INCOME SECURITIES
Unit Learning Aims and Objectives . Understand the main characteristics of fixed incomes
instruments which enable a variety of borrowers to raise capital from investors by issuing debt securities
. Gain a comprehensive overview of global bond markets and the financial and macro-economic drivers of the capital flow into these markets
. Attain an ability to examine and contrast of the different kinds of bonds – sovereign, corporate, fixed rate/floating rate, asset backed, zero coupon, seniority
. Obtain a clear understanding of the principles of fixed income mathematics and the sensitivity of bonds to changes in credit conditions and the interest rate environment
. Obtain a critical consideration of the advantages/ disadvantages to issuers and purchasers of securitisation instruments
UNIT CONTENT • Characteristics of Sovereign Bonds
– US Treasury market – UK gilt market – Japanese government bond market – principal EU markets – index linked bond characteristics – stripped government bonds
• Characteristics of Corporate Debt – Eurobonds – Floating Rate Notes (FRNs) – subordinated – Asset Backed (ABS) – zero coupon bonds – convertible debt securities
• Issuance of fixed income securities – pricing and role of underwriters/syndicates – spreads over government bond benchmarks – over LIBOR – fixed and floating charge securities
• Fixed income markets and trade execution – Inter-Dealer (IDB) price-driven electronic trading platforms – OTC inter-dealer voice trading – on-Exchange trading
• Valuation of fixed income securities – time value of money/discounting – yield to maturity – clean and dirty prices – trading cum and ex div
• Bond sensitivity – modified duration and convexity – the term structure of interest rates
• Securitization – Mortgage Backed Securities (MBS) – CDOs – more exotic types
COURSE SYLLABUS
UNIT 3 – MONEY MARKET SECURITIES, FOREIGN EXCHANGE & SETTLEMENT Unit Learning Aims and Objectives . A comprehensive understanding of the role of cash and near
cash instruments – including short term government and corporate paper - as primary drivers of money markets and short term interest rates
. Understand the $5 trillion per day market for foreign exchange – spot, forwards and swaps
. Gain a detailed comprehension of the role of clearing and settlement in markets including those for equities, FX, bonds, and derivatives
. Benefit from a full exploration of the role of a variety of financial intermediaries including prime brokers, custodians, investment banks and dealers
UNIT CONTENT • Cash instruments and markets
– treasury bills – commercial paper – money market funds – deposit insurance and default compensation schemes
• Money markets – repo market – re-hypothecation
• Foreign exchange instruments and markets – characteristics of global FX Market – 24 hour nature – de-centralized – spot contracts – FX forwards – FX futures – currency swaps
• Macro-economic drivers of global capital flows – FX in emerging markets – exotic currencies – interest rate parity and pricing of forwards
• Clearing, settlement and safe custody – prime brokerage and equity finance – principles of Delivery vs. Payment (DVP)
• Custodians/Nominees – designated nominee – pooled nominee accounts – legal ownership/beneficial ownership
• Purpose, requirements and implications of securities lending – function of SBLIs – market makers
UNIT 4 – EXCHANGE TRADED FUNDS & COLLECTIVE INVESTMENT VEHICLES Unit Learning Aims and Objectives . Get clarification of the mechanics and rationale for
collective investment vehicles/products . Comprehension of the historical development of Exchange
Traded Funds (ETF’s) and an examination of the popularity, scope and usage of these packaged securities
. Obtain the ability to contrast the costs/benefits, management styles and the principal consumers of different collective investment products
. Leave with an increased grasp of the of structured investment products – the financial engineering required in product creation and the rationale and benefits to issuers and purchasers
. Fully understand the role of hedge funds and their different investment styles and strategies
UNIT CONTENT • Characteristics of Exchange-Traded Funds (ETFs)
– continuous trading – expenses – tracking error – fiduciary/trust architectures – role of sponsors – creation units
• Contrast passive index tracker ETFs with actively managed funds
• Examination of geographical ETFs – commodity ETFs – features of inverse ETFs – leveraged funds
• Characteristics of Collective Investment Vehicles (CIVs) – OEICs – unit trusts – investment trusts – Real Estate Investment Trusts (REITs) – Life assurance investment bonds – endowment policies – annuities
• Management of CIVs – fee structures – net asset value – trade at discount/premium to NAV – location/domicile – pass-porting – UCITS compliance
• Structured products – risks – capital protection – valuation and yield characteristics of structured products – tax efficiency – prospects for capital growth and income – asset cover – redemption yield
• Hedge Funds – main strategies of hedge funds – investment risk and return – allocation – valuation and quality of holdings
COURSE SYLLABUS
UNIT 5 – FUTURES & EXCHANGE TRADED OPTIONS
Unit Learning Aims and Objectives . Examine the evolution of the futures markets in commodities
into the coverage of futures for a wide array of financial instruments
. Grasp Central Counter Party Clearing (CCP), settlement, collateral/margin management, risk, contrast with bilateral clearing
. Improve your knowledge of principal futures exchanges and futures contracts
. Recognise the manner in which exchange traded futures and options are priced, fair value, trading strategies and uses in hedging
. Gain the ability to critically examine different kinds of options, pricing issues including Black Scholes and binomial models, sensitivities to market factors etc.
UNIT CONTENT • Futures and options traded on exchanges
– contractual assets – Centralized Clearing (CCPs) – regulatory initiatives designed to promote migration from OTC
to CCP – central clearing vs. counterparty risk
• Legal framework – clearing – initial margin – variation margin – novation and the role of Central Counterparty (CCP)
• Factors of options pricing – Black Scholes Merton model – binomial tree methods – option premium – understanding the “Greeks” – delta and dynamic hedging – time value – intrinsic value
• Types of options – puts and calls – perspectives of buyer and writer – American – European – Asian style – risks to buyer/writers of options
• Characteristics of futures contracts – standardised contract specifications – tick size – contract size – delivery dates – calculation of fair value – cost of carry – contango – backwardation
• Principal futures contracts – Eurodollar – bond futures – short term interest rates – stock index futures – FX futures – Energy – Metals
– agricultural products • Exchanges and platforms
– open outcry – order types accepted by the markets – market orders – limit orders – cash settlement/physical delivery
UNIT 6 – KEY ELEMENTS OF SWAPS
Unit Learning Aims and Objectives . Leave with the ability to critically assess the role of swaps
in contemporary financial markets – their historical development and the role of financial engineering in ongoing innovations and their continuing evolution
. Examine the legal frameworks for swaps – ISDA Master Agreement, Credit Support Annex (CSA) etc.
. Critically examine the different techniques involving derivatives for addressing interest rate risk and credit default including a case study of the sovereign default of Greece in 2012
. Analyse in detail Credit Default Swaps in both the corporate and sovereign markets
UNIT CONTENT • Characteristics and rationale in the development of swaps
– hedging interest rate risk – customised vs. standardised contracts – off balance sheet benefits – regulatory arbitrage – rationale of fixed/floating interest rate swaps
• Principal types of swaps – interest rate swaps – plain vanilla and more complex – FX swaps – currency basis swaps – commodity swaps – equity swaps
• Credit Default Swaps – how they work and how they are quoted
• Counter party risk – treatment under Basel III – role of collateral – principle of “netting”
• ISDA Documentation – Master agreements and protocols – collateralisation
Case Study the re-structuring/default of Greek government debt in 2012, impact on the sovereign CDS market, jurisdiction of swap agreements, Contingency Action Clauses (CACs)
COURSE SYLLABUS
UNIT 7 – RISK MANAGEMENT WITH DERIVATIVES
Unit Learning Aims and Objectives . A core understanding of the key strands of financial risk
management . Ability to critically examine some of the key drivers of the
kind of systemic risk seen in 2008 which involved counter party credit risk from the use of credit derivatives including correlation, tail risk etc.
. Ability to critically assess the role that derivatives play with regard to creating portfolio risk and in turn, providing useful techniques for hedging risk for investment managers
. The capability to examine stress modelling techniques and their relevance to the Basel III regulatory framework
UNIT CONTENT • Stress testing for derivative portfolios with non-linear
characteristics – modeling methods – contingency scenarios – Basel III focus on stress testing, Extreme Value Theory (EVT)
• Monte Carlo simulations – how to conduct them – quantifying the exposure and severity of “outliers” – tail risk
• Principal Components Analysis – uses in implementing risk management with derivatives
• Examination of the CMEs SPAN algorithm regarding market volatility and liquidity
• Explanation of how margin works in the futures markets – uses of collateral in mitigating counter-party risk with swaps
• Correlation issues – use of copulas – modeling techniques – non-linear risk characteristics – left tail dependencies – how these impacted CDOs
• Complex credit derivatives – basket CDS products – nth to default type structures
UNIT 8 – TRADING DERIVATIVES, INVESTMENT & HEDGING STRATEGIES
Unit Learning Aims and Objectives . A thorough understanding of the purposes and
motivations of the main users of derivative instruments in financial markets
. Ability to confidently explane the risk/reward matrix regarding the short term trading of derivatives
. A clear understanding of the use of derivatives with longer term investment horizons can be both a tactical and strategic component of an asset allocation strategy
. Ability to critically analyse case studies and real world illustrations of how the principal classes of derivatives – futures, options and swaps - can be used to hedge a portfolio of securities
UNIT CONTENT • Derivatives users
– roles of hedgers – speculators – arbitrageurs
• Usage of derivatives by banks to hedge credit and market risk – trading book vs. banking book – treatment of derivatives under Basel III
• Principles of hedging with futures – swaps and options – delta and gamma – volatility
• Hedge ratio calculation for equity and bond futures • Futures spread trading - intra-market spreads and inter-
market spreads • Option strategies
– long and short straddles – strangles – bull and bear spreads – motivations for strategies – risk/reward payoff diagrams
• Relative merits of different derivatives for hedging purposes – costs – counterparty risk – liquidity of markets – market to market issues
• Examination of role of derivatives in financial crisis of 2007/8 – systemic risk – correlation issues
OPTION OF A POSTGRADUATE CERTIFICATE WITH MIDDLESEX UNIVERSITY You have the unique opportunity to choose a validated option for this course and receive a postgraduate certificate on completion. This programme is quality assured by Middlesex University and you will receive a Middlesex award on successful completion. However, if university validation isn’t important to you there is still the opportunity to take the standard non-validated course.
WHAT DOES THE CERTIFICATE ENTAIL? In addition to studying all the units and passing the short self assessment tests after each unit, you will need to submit a 5000 word assignment at the end of the course which will be assessed. The assignment will be a cumulative project that you will work through and build upon during each stage of the course.
If you wish to book on the certification course there will be an assessment fee of £360.
ENTRY REQUIREMENTS Participants wishing to undertake the Postgraduate Certificate are required to have a degree or equivalent qualification (or relevant work experience).
Participants wishing to undertake the course but not receive the Postgraduate Certificate are not required to have any formal qualifications.
ABOUT OUR PARTNER MIDDLESEX UNIVERSITY
History Middlesex University is a large London based university with a history in higher education dating from 1878. In 1992 it was granted the Royal Charter making it a university. The university offers a broad range of courses through four academic schools of Arts and Education; Business; Engineering and Information Sciences; Health and Social Sciences and their Institute for Work Based Learning.
Middlesex University has over 34,000 students studying on its courses worldwide, both at its own campuses and also with partner institutions, making it one of the largest providers of British university education to international students. Middlesex University has a long history of successful collaborations with the corporate sector. It was the first academic institution to develop industry specific MBA programmes (Shipping & Logistics and Oil & Gas) delivered 100% by distance learning.
INTERNATIONAL REACH Middlesex University is committed to meeting the needs and ambitions of a culturally and internationally diverse range of students by providing challenging academic programmes. It has a major international business school based in London with overseas campuses in Dubai and Mauritius and a global portfolio of partnerships delivering high quality validated programmes in business and management.
Staff and students come from a wide spectrum of cultures and backgrounds with a common interest in executive education that is world class, modern and applicable. Middlesex University Business School is proud of its dedicated teachers and its rich range of learning resources including distance learning and virtual learning environments.
BENEFITS OF STUDYING FOR A POSTGRADUATE CERTIFICATE WITH US
A MIDDLESEX POSTGRADUATE CERTIFICATE: n Is project based and practical n Offers networking opportunities during and
after the course n Provides exceptional teaching staff n Delivers applied learning experiences n Combines academic rigour with individual
support
HOW IS THE COURSE VALIDATED?* This programme is quality assured by Middlesex University and after successfully completing your studies you will receive a Postgraduate Certificate from Middlesex University. Middlesex Certificates are recognised worldwide.
QUALITY The Quality Assurance Agency (QAA) visited Middlesex in 2015 and noted in its report that its auditors had confidence in the University’s current and likely future management of its academic standards and of the learning opportunities available to students.
THE UNIVERSITY IS A MAJOR PROVIDER OF BUSINESS AND MANAGEMENT EDUCATION, WITH AN IMPRESSIVE TRACK RECORD OF WORKING IN PARTNERSHIP WITH THE PUBLIC AND THE PRIVATE SECTOR, AS WELL AS INTERNATIONAL ORGANISATIONS
IFF is the learning partner of
THE MECHANICS OF DERIVATIVES AND FINANCIAL PRODUCTS POSTGRADUATE CERTIFICATE DELIVERED BY DISTANCE LEARNING OVER 16 WEEKS
Contact: www.iff-training.com Tel: +44(0)20 7017 7190 Email: [email protected]
Duration: 16 Weeks
Dates: 19 June 2019
Learning partner of
THE MECHANICS OF
Dates: 25 September 2019 12 February 2020
POSTGRADUATE CERTIFICATE DELIVERED BY DISTANCE LEARNING OVER 16 WEEKS
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DISTANCE LEARNING COURSE CATALOGUE THE WORLD'S LEADING PROVIDER OF ONLINE TRAINING FOR BANKING AND FINANCE PROFESSIONALS
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THE MECHANICS OF
POSTGRADUATE CERTIFICATE DELIVERED BY DISTANCE LEARNING OVER 16 WEEKS
Learning partner of
APPLY ONLINE HERE
Learning partner of
THE MECHANICS OF
DERIVATIVES AND FINANCIAL PRODUCTS
WHAT YOU WILL LEARN This ground-breaking course will examine the rationale, mechanics and risks/rewards for investors in a variety of financial instruments which provide direct and indirect exposure to these asset classes. There will be a focus on the way in which these instruments function, the markets and platforms upon which they trade, and the motivations behind the selection of such instruments in constructing an investment portfolio. While securities such as shares, and bonds represent primary financial instruments of the major asset classes such as equities and fixed income, there will also be a comprehensive examination of the wide variety of derivative instruments which have grown rapidly in response to increased volatility in exchange rates, interest rates, commodity prices and the need to manage risks in a complex financial environment. Instruments that will be examined include options, futures, swaps, structured products, exchange traded funds and other collective investment vehicles. These will be considered from the perspectives of the hedger, the speculator and, on the sell side, from the perspective of the originators and structurers of these products. You have the opportunity to receive a Postgraduate Certificate from Middlesex University. This is the only course on this topic that offers you the chance to get this qualification. The course takes place over 16 weeks and consists of eight distance learning units. Every two weeks an additional unit will be released with the associated assessment so you can grasp your understanding before moving on to the next unit.
COURSE AT A GLANCE Unit 1 – Equities, global equity markets and indices Unit 2 – Fixed income securities Unit 3 – Money market securities, foreign exchange and settlement Unit 4 – Exchange traded funds and collective investment schemes Unit 5 – Exchange traded derivatives: futures and options Unit 6 – Key elements of swaps Unit 7 – Risk management with derivatives Unit 8 – Trading derivatives, hedging and investment strategies
COURSE LEADER CLIVE CORCORAN Clive Corcoran has been engaged in the finance and investment management sectors, on both sides of the Atlantic, for more than 25 years. After completing his education in the UK, Canada and the US, he co-founded and became the CEO of an investment management company based in the USA during the 1980’s and 90’s. The company provided wealth management and fiduciary services to a variety of international clientsHis own responsibilities included personalized business management, international tax planning and providing strategic financial advice to high net worth individuals. Since re-locating to the UK in 2000, he has continued, as an FCA registered investment adviser, to be engaged in providing strategic investment advice to private clients and pension funds. During recent years he has written several books on international finance, focusing on asset allocation and risk managementHe also has also been very actively involved in executive education on a global basis for finance professionals. He conducts workshops and in-house courses on a variety of topics including risk management, Basel III and capital adequacy, central banking, systemic risk, asset allocation techniques, credit risk, market risk and derivatives. Hear from the trainer himself: www.iff-training.com/VIDMSD
HOW YOU WILL LEARN • A new module is released every two weeks • You can study the units online, save them to your
computer or print them out • You set the pace for yourself • No need to travel or take time off work – cost effective • Apply the knowledge, skills and expertise to your work
straight away
POSTGRADUATE CERTIFICATE To make your studies more relevant and valuable, the course is validated by the Business School at Middlesex University at a Postgraduate Certificate level. For those wishing to receive a Postgraduate Certificate from Middlesex University, an additional marked assignment of 5000 words will need to be submitted, based on a continuing case study that runs throughout the duration of the course.
PRICE
* VAT may be payable depending on your location –
see online booking page for details
HOW TO APPLY Tel: +44 (0)20 7017 7190 Email: [email protected]
CUSTOMISED TRAINING IFF’s bespoke digital training solutions will help you address your specific key business challenges. The programme is designed for you, with content focusing on the issues you and your teams are facing. The fully branded digital course will be hosted by us, and unlike other online courses, your employees will receive a specialist qualification at the end of the programme from a London University.
• Tailored content - 100% targeted to cover your business needs
• No travel or time out of the office – 100% Distance Learning
• Value for money – train teams of staff at the same time • Risk free – we’ve been doing this for 30 years
We will meet you anywhere in the world. If you would like one of our consultants to talk about your needs in more detail or if you would like more information on our customised training solutions, please contact us on +44 (0)20 7017 7190 or email: [email protected]
COURSE INFORMATION DELIVERED BY DISTANCE LEARNING OVER 16 WEEKS
APPLY ONLINE HERE
UNIT 1 – EQUITIES, GLOBAL EQUITY MARKETS & INDICES
Unit Learning Aims and Objectives . A Understand the defining characteristics of financial
securities and their relationship to assets . Gain the ability to contrast the nature of financial securities
with the derivatives which are structured and dependent upon these underlying securities
. Increase your understanding of the role that equity plays in the capital structure of corporations
. Obtain a full comprehensive overview of different types of equities including warrants and CFDs,
. Enhance knowledge of the issuance of equities and the manner in which they are traded in contemporary markets
. Benefit from an ability to analyse relationship between the financial performance of companies and the behaviour of their share prices, dividends, management policy etc.
UNIT CONTENT • The differences between a security and a derivative
– fundamental financial claims – ownership of equity vs. a derivative claim which is contractually bound to the performance of an underlying or fundamental claim
• The principal types of equities – ordinary (common) shares – preference shares – convertible securities – ranking for dividends – liquidation priority
• Issuance of equities – stages of IPOs – private placements – secondary offerings – rights issues – role of underwriters
• Equity markets and trade execution • Order driven/quote driven platforms
– alternative trading venues – dark pools – order types – trade settlement
• Warrants, Covered warrants and Contracts for Difference (CFDs) – relative risks of warrants and covered warrants – mechanics of a CFD
• High Frequency Trading – market making – liquidity provisioning – flash crashes
• Equity valuation – dividend discounting models – financial ratios – fundamental analysis
• Historical overview of equity market returns – P/E ratios – comparison with returns on other asset classes – over-valuation indicators – risk premium – overview of Capital Asset Pricing Model (CAPM) and portfolio
theory
• Review of major equity indices – market classifications – major markets – emerging markets
UNIT 2 – FIXED INCOME SECURITIES
Unit Learning Aims and Objectives . Understand the main characteristics of fixed incomes
instruments which enable a variety of borrowers to raise capital from investors by issuing debt securities
. Gain a comprehensive overview of global bond markets and the financial and macro-economic drivers of the capital flow into these markets
. Attain an ability to examine and contrast of the different kinds of bonds – sovereign, corporate, fixed rate/floating rate, asset backed, zero coupon, seniority
. Obtain a clear understanding of the principles of fixed income mathematics and the sensitivity of bonds to changes in credit conditions and the interest rate environment
. Obtain a critical consideration of the advantages/ disadvantages to issuers and purchasers of securitisation instruments
UNIT CONTENT • Characteristics of Sovereign Bonds
– US Treasury market – UK gilt market – Japanese government bond market – principal EU markets – index linked bond characteristics – stripped government bonds
• Characteristics of Corporate Debt – Eurobonds – Floating Rate Notes (FRNs) – subordinated – Asset Backed (ABS) – zero coupon bonds – convertible debt securities
• Issuance of fixed income securities – pricing and role of underwriters/syndicates – spreads over government bond benchmarks – over LIBOR – fixed and floating charge securities
• Fixed income markets and trade execution – Inter-Dealer (IDB) price-driven electronic trading platforms – OTC inter-dealer voice trading – on-Exchange trading
• Valuation of fixed income securities – time value of money/discounting – yield to maturity – clean and dirty prices – trading cum and ex div
• Bond sensitivity – modified duration and convexity – the term structure of interest rates
• Securitization – Mortgage Backed Securities (MBS) – CDOs – more exotic types
COURSE SYLLABUS
UNIT 3 – MONEY MARKET SECURITIES, FOREIGN EXCHANGE & SETTLEMENT Unit Learning Aims and Objectives . A comprehensive understanding of the role of cash and near
cash instruments – including short term government and corporate paper - as primary drivers of money markets and short term interest rates
. Understand the $5 trillion per day market for foreign exchange – spot, forwards and swaps
. Gain a detailed comprehension of the role of clearing and settlement in markets including those for equities, FX, bonds, and derivatives
. Benefit from a full exploration of the role of a variety of financial intermediaries including prime brokers, custodians, investment banks and dealers
UNIT CONTENT • Cash instruments and markets
– treasury bills – commercial paper – money market funds – deposit insurance and default compensation schemes
• Money markets – repo market – re-hypothecation
• Foreign exchange instruments and markets – characteristics of global FX Market – 24 hour nature – de-centralized – spot contracts – FX forwards – FX futures – currency swaps
• Macro-economic drivers of global capital flows – FX in emerging markets – exotic currencies – interest rate parity and pricing of forwards
• Clearing, settlement and safe custody – prime brokerage and equity finance – principles of Delivery vs. Payment (DVP)
• Custodians/Nominees – designated nominee – pooled nominee accounts – legal ownership/beneficial ownership
• Purpose, requirements and implications of securities lending – function of SBLIs – market makers
UNIT 4 – EXCHANGE TRADED FUNDS & COLLECTIVE INVESTMENT VEHICLES Unit Learning Aims and Objectives . Get clarification of the mechanics and rationale for
collective investment vehicles/products . Comprehension of the historical development of Exchange
Traded Funds (ETF’s) and an examination of the popularity, scope and usage of these packaged securities
. Obtain the ability to contrast the costs/benefits, management styles and the principal consumers of different collective investment products
. Leave with an increased grasp of the of structured investment products – the financial engineering required in product creation and the rationale and benefits to issuers and purchasers
. Fully understand the role of hedge funds and their different investment styles and strategies
UNIT CONTENT • Characteristics of Exchange-Traded Funds (ETFs)
– continuous trading – expenses – tracking error – fiduciary/trust architectures – role of sponsors – creation units
• Contrast passive index tracker ETFs with actively managed funds
• Examination of geographical ETFs – commodity ETFs – features of inverse ETFs – leveraged funds
• Characteristics of Collective Investment Vehicles (CIVs) – OEICs – unit trusts – investment trusts – Real Estate Investment Trusts (REITs) – Life assurance investment bonds – endowment policies – annuities
• Management of CIVs – fee structures – net asset value – trade at discount/premium to NAV – location/domicile – pass-porting – UCITS compliance
• Structured products – risks – capital protection – valuation and yield characteristics of structured products – tax efficiency – prospects for capital growth and income – asset cover – redemption yield
• Hedge Funds – main strategies of hedge funds – investment risk and return – allocation – valuation and quality of holdings
COURSE SYLLABUS
UNIT 5 – FUTURES & EXCHANGE TRADED OPTIONS
Unit Learning Aims and Objectives . Examine the evolution of the futures markets in commodities
into the coverage of futures for a wide array of financial instruments
. Grasp Central Counter Party Clearing (CCP), settlement, collateral/margin management, risk, contrast with bilateral clearing
. Improve your knowledge of principal futures exchanges and futures contracts
. Recognise the manner in which exchange traded futures and options are priced, fair value, trading strategies and uses in hedging
. Gain the ability to critically examine different kinds of options, pricing issues including Black Scholes and binomial models, sensitivities to market factors etc.
UNIT CONTENT • Futures and options traded on exchanges
– contractual assets – Centralized Clearing (CCPs) – regulatory initiatives designed to promote migration from OTC
to CCP – central clearing vs. counterparty risk
• Legal framework – clearing – initial margin – variation margin – novation and the role of Central Counterparty (CCP)
• Factors of options pricing – Black Scholes Merton model – binomial tree methods – option premium – understanding the “Greeks” – delta and dynamic hedging – time value – intrinsic value
• Types of options – puts and calls – perspectives of buyer and writer – American – European – Asian style – risks to buyer/writers of options
• Characteristics of futures contracts – standardised contract specifications – tick size – contract size – delivery dates – calculation of fair value – cost of carry – contango – backwardation
• Principal futures contracts – Eurodollar – bond futures – short term interest rates – stock index futures – FX futures – Energy – Metals
– agricultural products • Exchanges and platforms
– open outcry – order types accepted by the markets – market orders – limit orders – cash settlement/physical delivery
UNIT 6 – KEY ELEMENTS OF SWAPS
Unit Learning Aims and Objectives . Leave with the ability to critically assess the role of swaps
in contemporary financial markets – their historical development and the role of financial engineering in ongoing innovations and their continuing evolution
. Examine the legal frameworks for swaps – ISDA Master Agreement, Credit Support Annex (CSA) etc.
. Critically examine the different techniques involving derivatives for addressing interest rate risk and credit default including a case study of the sovereign default of Greece in 2012
. Analyse in detail Credit Default Swaps in both the corporate and sovereign markets
UNIT CONTENT • Characteristics and rationale in the development of swaps
– hedging interest rate risk – customised vs. standardised contracts – off balance sheet benefits – regulatory arbitrage – rationale of fixed/floating interest rate swaps
• Principal types of swaps – interest rate swaps – plain vanilla and more complex – FX swaps – currency basis swaps – commodity swaps – equity swaps
• Credit Default Swaps – how they work and how they are quoted
• Counter party risk – treatment under Basel III – role of collateral – principle of “netting”
• ISDA Documentation – Master agreements and protocols – collateralisation
Case Study the re-structuring/default of Greek government debt in 2012, impact on the sovereign CDS market, jurisdiction of swap agreements, Contingency Action Clauses (CACs)
COURSE SYLLABUS
UNIT 7 – RISK MANAGEMENT WITH DERIVATIVES
Unit Learning Aims and Objectives . A core understanding of the key strands of financial risk
management . Ability to critically examine some of the key drivers of the
kind of systemic risk seen in 2008 which involved counter party credit risk from the use of credit derivatives including correlation, tail risk etc.
. Ability to critically assess the role that derivatives play with regard to creating portfolio risk and in turn, providing useful techniques for hedging risk for investment managers
. The capability to examine stress modelling techniques and their relevance to the Basel III regulatory framework
UNIT CONTENT • Stress testing for derivative portfolios with non-linear
characteristics – modeling methods – contingency scenarios – Basel III focus on stress testing, Extreme Value Theory (EVT)
• Monte Carlo simulations – how to conduct them – quantifying the exposure and severity of “outliers” – tail risk
• Principal Components Analysis – uses in implementing risk management with derivatives
• Examination of the CMEs SPAN algorithm regarding market volatility and liquidity
• Explanation of how margin works in the futures markets – uses of collateral in mitigating counter-party risk with swaps
• Correlation issues – use of copulas – modeling techniques – non-linear risk characteristics – left tail dependencies – how these impacted CDOs
• Complex credit derivatives – basket CDS products – nth to default type structures
UNIT 8 – TRADING DERIVATIVES, INVESTMENT & HEDGING STRATEGIES
Unit Learning Aims and Objectives . A thorough understanding of the purposes and
motivations of the main users of derivative instruments in financial markets
. Ability to confidently explane the risk/reward matrix regarding the short term trading of derivatives
. A clear understanding of the use of derivatives with longer term investment horizons can be both a tactical and strategic component of an asset allocation strategy
. Ability to critically analyse case studies and real world illustrations of how the principal classes of derivatives – futures, options and swaps - can be used to hedge a portfolio of securities
UNIT CONTENT • Derivatives users
– roles of hedgers – speculators – arbitrageurs
• Usage of derivatives by banks to hedge credit and market risk – trading book vs. banking book – treatment of derivatives under Basel III
• Principles of hedging with futures – swaps and options – delta and gamma – volatility
• Hedge ratio calculation for equity and bond futures • Futures spread trading - intra-market spreads and inter-
market spreads • Option strategies
– long and short straddles – strangles – bull and bear spreads – motivations for strategies – risk/reward payoff diagrams
• Relative merits of different derivatives for hedging purposes – costs – counterparty risk – liquidity of markets – market to market issues
• Examination of role of derivatives in financial crisis of 2007/8 – systemic risk – correlation issues
OPTION OF A POSTGRADUATE CERTIFICATE WITH MIDDLESEX UNIVERSITY You have the unique opportunity to choose a validated option for this course and receive a postgraduate certificate on completion. This programme is quality assured by Middlesex University and you will receive a Middlesex award on successful completion. However, if university validation isn’t important to you there is still the opportunity to take the standard non-validated course.
WHAT DOES THE CERTIFICATE ENTAIL? In addition to studying all the units and passing the short self assessment tests after each unit, you will need to submit a 5000 word assignment at the end of the course which will be assessed. The assignment will be a cumulative project that you will work through and build upon during each stage of the course.
If you wish to book on the certification course there will be an assessment fee of £360.
ENTRY REQUIREMENTS Participants wishing to undertake the Postgraduate Certificate are required to have a degree or equivalent qualification (or relevant work experience).
Participants wishing to undertake the course but not receive the Postgraduate Certificate are not required to have any formal qualifications.
ABOUT OUR PARTNER MIDDLESEX UNIVERSITY
History Middlesex University is a large London based university with a history in higher education dating from 1878. In 1992 it was granted the Royal Charter making it a university. The university offers a broad range of courses through four academic schools of Arts and Education; Business; Engineering and Information Sciences; Health and Social Sciences and their Institute for Work Based Learning.
Middlesex University has over 34,000 students studying on its courses worldwide, both at its own campuses and also with partner institutions, making it one of the largest providers of British university education to international students. Middlesex University has a long history of successful collaborations with the corporate sector. It was the first academic institution to develop industry specific MBA programmes (Shipping & Logistics and Oil & Gas) delivered 100% by distance learning.
INTERNATIONAL REACH Middlesex University is committed to meeting the needs and ambitions of a culturally and internationally diverse range of students by providing challenging academic programmes. It has a major international business school based in London with overseas campuses in Dubai and Mauritius and a global portfolio of partnerships delivering high quality validated programmes in business and management.
Staff and students come from a wide spectrum of cultures and backgrounds with a common interest in executive education that is world class, modern and applicable. Middlesex University Business School is proud of its dedicated teachers and its rich range of learning resources including distance learning and virtual learning environments.
BENEFITS OF STUDYING FOR A POSTGRADUATE CERTIFICATE WITH US
A MIDDLESEX POSTGRADUATE CERTIFICATE: n Is project based and practical n Offers networking opportunities during and
after the course n Provides exceptional teaching staff n Delivers applied learning experiences n Combines academic rigour with individual
support
HOW IS THE COURSE VALIDATED?* This programme is quality assured by Middlesex University and after successfully completing your studies you will receive a Postgraduate Certificate from Middlesex University. Middlesex Certificates are recognised worldwide.
QUALITY The Quality Assurance Agency (QAA) visited Middlesex in 2015 and noted in its report that its auditors had confidence in the University’s current and likely future management of its academic standards and of the learning opportunities available to students.
THE UNIVERSITY IS A MAJOR PROVIDER OF BUSINESS AND MANAGEMENT EDUCATION, WITH AN IMPRESSIVE TRACK RECORD OF WORKING IN PARTNERSHIP WITH THE PUBLIC AND THE PRIVATE SECTOR, AS WELL AS INTERNATIONAL ORGANISATIONS
IFF is the learning partner of
THE MECHANICS OF DERIVATIVES AND FINANCIAL PRODUCTS POSTGRADUATE CERTIFICATE DELIVERED BY DISTANCE LEARNING OVER 16 WEEKS
Contact: www.iff-training.com Tel: +44(0)20 7017 7190 Email: [email protected]
Duration: 16 Weeks
Dates: 19 June 2019
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Dates: 25 September 2019 12 February 2020
POSTGRADUATE CERTIFICATE DELIVERED BY DISTANCE LEARNING OVER 16 WEEKS
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