An Introduction to Derivatives, (Two Days)
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This Derivatives training course explains both exchange traded and over the counter products. It is designed for those who need to know more about derivatives. The workshop addresses how the products work, what they are used for and the risks they contain. The course covers the following:
- An introduction to exchange traded and OTC products
- How these products work & how they are used
- The main market and operational risks that arise
- Valuations and credit exposures
- Operational issues involved
Training will be in a workshop format. This will include a mixture of presentation and case study material. The course is designed for up to ten staff.
Below is a summary of the Derivatives training course. The content of each day has been placed in a logical sequence and addresses the key topics.
Day One
Introduction
- What a derivative is
- Why derivatives are used
- Why the market has grown
- Exchange traded derivatives
- Over the counter derivatives
- Derivative terminology
Interest rate products
Interest rate futures
- Underlying
- Tick value
- Pricing
- Margins
- Simple trades
- Practical application
Forward rate agreements
- Pricing
- Market use
- Settlement
Interest rate swaps & currency swaps:
- What they are
- How they can be used
Hedging:
- New issues & debt
- Asset swaps
Trading: rates & spreads
- How swaps are valued
- How they are documented
- Importance of the confirmation
- Credit risk
Day Two
Options:
- Option terminology
- The four option positions
- What influences the option price
Interest rate options
- Caps / floors /swaptions
- How they work
- Practical application
Credit products:
- Why credit trading is growing
Credit default swaps, (CDS)
- How a CDS trade works
- What the premium is
- The main terms used
- What happens if there is a credit event
- Risks with CDS transactions
- How CDS are used
Risk mitigation
- Collateral agreements
- Margins
- Break clauses
Operational issues
- Trade Lifecycle
- Trade capture
- Accuracy
- Confirmations
How derivatives have caused problems
- Selected case studies where financial institutions have experienced losses as a result of weak controls surrounding derivatives
End of workshop & review
Related Documents
19th January 2012