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Foreign Exchange, Money Markets and Derivatives

DATE

Yet to be Determind

LOCATION

to be determined

Why Attend?

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.

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.

course-obj_img Course Objectives

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course-obj_img Target Audience

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.

Interface of money markets and foreign exchange (FX)

  • Size of the markets
  • Issuance of Treasury instruments, repos, and commercial paper
  • Overview of the Euromarkets
  • Legacy issues relating to London Interbank Offered Rate (LIBOR)
  • Secured Overnight Financing Rate (SOFR), SONIA, ESTER
  • 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

Role of central banks in the financial system

  • Overview of central banks
    • Federal Reserve
    • European Central Bank
    • People’s Bank of China
    • Bank of Japan
    • Bank of England
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  • 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
  • Nature of payments systems – real-time gross settlement systems (RTGS), net settlement, Fedwire, Target2

Monetary policy and money supply

  • Overview of the policy committees
    • Federal Open Market Commmittee (FOMC)
    • Monetary Policy Committee of the Bank of England (MPC of BOE)
    • European Central Bank (ECB Governing Council)
    • The People’s Bank of China (PBOC) governance
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  • Overview of money supply
  • Monetary tools and how they impact money supply
  • How is money created in a modern economy
  • Inflation targeting
  • Central bank reserves
  • Explanation of the Taylor rule
  • Term structure of interest rates

Foreign exchange market characteristics

  • 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

Interest rate (IR) swaps

  • Basic structures and terminology of swaps
  • Business case for using IR swaps
  • Contrast money market rates and IR swap rates
  • Notion of swap as an aggregation of forward rate agreements
  • Pricing the fixed leg and interpreting the swap markets
  • Counter party risk
  • Recognition that credit valuation adjustment (CVA) is integral part of trading practices and pricing of derivatives and not just a regulatory (Basel) issue
  • Over-The-Counter (OTC) market versus Swap Execution Facilities (SEF’s)
  • Collateralized OTC trades versus margin based Central Clearing Party (CCP) platforms
  • Netting arrangements

This course hasn't been scheduled yet, however you can request for In-House training

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