Collateral management is an important process that is used to manage and mitigate the credit risk associated with over-the-counter derivatives. Whilst helping to reduce credit risk, collateral management exposes the firm to operational, legal, liquidity and price risks. Understanding and managing these risks is essential.

Who is this course for?

This workshop is suitable for people in operations, risk, finance and audit. Whether you are responsible for setting up collateral management or whether you are involved with handling collateral, this workshop will help you understand more about what's involved, why you do it and the risks incurred. 

What is the level?

The course is an introduction and no prior knowledge of collateral is assumed. There will be a mixture of presentation material, case studies, questions and answers.

This is what you will learn:

• What credit risk is and how it occurs;
• How derivatives create credit exposures;
• How OTC derivatives can be margined;
• How collateral management works;
• The terminology & mechanics of the collateral market;
• The risks that collateral management generates and how they can be managed;
• The documentation used;
• The role of the collateral manager;
• Whether the advantages outweigh the costs;
• Regulation and how it's affecting collateral management.

Course date 30th May 2012.

Course fee £595 + VAT per person.

Cancellations may be made up to 20 days before the event. A £50 administrative charge will apply. Refunds cannot be made for later cancellations but substitution can be made at any time.

If you prefer an invoice please contact us.

Also available as an in-house course

Venue
London

Course Director
William Webster

Questions
Any questions about this course?

Course Summary

Morning

Introduction

• The growth of collateral management

Credit exposures & derivatives

• Current credit exposure
• Potential future exposure
• Default probability
• Expected loss
• Futures and over-the-counter trades
• Lehman Brothers

How collateral management works

• Trade and portfolio valuation
• Netting
• Types of transactions covered
• Deciding on appropriated collateral
• Collateral calls and frequency
• Internal procedures
• Revaluation methodology

The collateral workflow

• Timing
• Margin call notice
• Non delivery
• Default
• Escalation processes

 Afternoon

Collateral terminology

• Independent amounts, (initial margin)
• Haircuts, (valuation percentage)
• Threshold amounts
• Minimum transfer amounts
• Interest on collateral

Documentation

• Credit support documents
• What is used and what you negotiate
• Enforceability

Problems & risks with collateral

• Trade and portfolio valuation
• Collateral valuation
• Operational risks
• Liquidity risks

Dispute resolution

• Why disputes arise
• How to avoid disputes
• How to resolve disputes
• Capital relief
• The conditions that are needed
• Why it is important to banks

The collateral team

• Purpose
• Cost versus benefits
• Operational effectiveness

Final case study

• Building the collateral statement
• Calling collateral

End of workshop and review

Course Director

William Webster has 27 years of practical financial markets experience. He has worked for Barclays, First Chicago, BNP and ANZ. From 1994 to 1999 he was Head of Treasury at Nacional Financiera, London branch.He has first hand experience of trading foreign exchange, money market, fixed income and derivative products in both mainstream and emerging markets.

William established Barbican Consulting Limited in 1991 in response to the need for practical financial training.  He now runs this business on a full time basis undertaking training & consultancy for an established client base of financial institutions in Europe. He holds a degree in Banking and Finance, together with an MBA from City University,is an Associate of the Chartered Institute of Bankers and a member of The Institute of Directors.

In the words of one client "William knows his stuff".