Overview

 

The global foreign exchange (FX) and money markets are the world’s largest markets and pivotal parts of the financial system.  In foreign exchange alone, more than $5 trillion of transactions occur daily.

These markets provide funding, trading and investment opportunities and are the conduit between all other components of the world’s capital markets. In recent years, the importance of the money markets has become even greater as financial institutions focus more closely on the management and diversification of their sources of liquidity, apply greater discipline to their funding and examine the attractions of short term investment and trading strategies.

Why this course

 
  •  

    This course provides a strong foundation on the instruments and activities of the international money and FX markets; and it focuses on the current profile of the markets and offers insights based on the lessons learned from the 2007-09 financial crisis as well as the latest market developments.

    Moreover, the course emphasizes the integrated nature of FX, money markets and derivatives. Mastering the mechanics and usages of such instruments provides excellent opportunities for arbitrage, hedging and risk management for those engaged in corporate treasury functions, commercial banks and asset management companies. The course also analyses the liquidity characteristics and risks of different instruments and funding strategies.

What to expect

 
  • Develop a deep understanding of the FX market, its mechanics and major participants

  • Analyze the role and impact of central banks on FX and money markets

  • Examine the nature of money supply, open market operations and quantitative easing

  • Demonstrate a thorough understanding of liquidity, capital adequacy and solvency

  • Apply analytical skills to key financial products within global money markets

  • Explain the logic and uses of financial derivatives – forwards, swaps and options

  • Develop an understanding of key strands of financial risk management

What is the course schedule?

 

Day 1 8.30 AM to 4.30 PM

 

  • Size of the markets

  • Issuance of Treasury instruments, repos, bankers acceptances, commercial paper

  • Overview of the Euromarkets

  • Treasury bill issuance in different jurisdictions

  • The mechanics of the Repo market

  • Forward rates for interest rate and FX

  • Effective yields when risk adjusted for FX exposures

  • Arbitrage and interest rate parity

  • Current market conditions

  • Risk premia, key money markets spreads and currency outlook

Day 2 8.30 AM to 4.30 PM

 

  • Overview of central banks

  • Structure of a central bank balance sheet

  • Characteristics of central bank’s assets and liabilities

  • Lender of last resort

  • Summary of Open Market Operations

  • Unorthodox monetary policy including quantitative easing (QE)

  • Independence of central banks

  • Financial stability and macro-prudential policy

  • Forward guidance and transparency of decision making

  • Management of FX reserves and exchange rate policy

Day 3 8.30 AM to 4.30 PM

 

  • Size of market, volumes, participants, major currency pairs

  • Regional breakdown of where and when most FX trading takes place

  • Key role of London market in FX trading

  • Historical background to today’s FX market

  • Role of the International Monetary Fund (IMF) and Special Drawing Rights (SDR’s)

  • Global FX reserves

  • Review of several key historical FX rates

  • Price of gold and relationship to the US Dollar index

Day 4 8.30 AM to 4.30 PM

 

  • Terminology – protection buyer/seller, reference entity,

  • Naked CDS positions

  • Contrast between a CDS and a financial insurance contract

  • Equating actual and contingent payments

  • Inputs to model – default probabilities, loss given default (LGD), forward curve

  • Sovereign and corporate markets

  • Single name CDS versus basket products, nth to default structures

  • Determination of a credit event

  • Recent amendments to the International Swaps and Derivatives Association (ISDA) protocols on determination of credit events

  • ISDA protocols

Day 5 8.30 AM to 4.30 PM

 

  • Key concepts of hedging equity and fixed income risk with derivatives

  • Using index futures and options to hedge equity portfolio

  • Hedge ratio calculation for equity futures

  • Options strategies

  • Using forwards to hedge forex risk

  • Using swaps to hedge credit risk

  • Using variance swaps to hedge volatility risk

  • Interest rate risks

  • Duration gap analysis

  • Interest rate forecasting

  • Who should attend?
  • This course is suitable for all those working within the banking industry, including wealth managers, auditors, accountants, finance specialists, risk managers, and treasury and product control professionals.  It is also suitable for those working with financial services and in corporate finance positions.

  • Participants
  • This course uses a wide range of learning methods, including explanatory slides, case studies, detailed examination of Excel models in an interactive workshop style environment and others.  

  • Training Style
  • The course will have a maximum of 13 people who will be selected based on the type of business they are in and their job role to ensure a thorough mix of industries, ideas and experience.

    Contact our training division