How the Financial Markets Work Training Course

Designed to expel the confusion that often surrounds the financial markets, this course looks at all the major financial markets and will help you understand the products that drive them.

Attend and you will gain full insight into the origins of the capital markets, the key players and the role of the regulatory institutions. Acquire a thorough grounding in the main financial products and how they are used, including: bonds, equities, futures and forwards, swaps and options.

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Institutions and Key Players

• Investors, borrowers, issuers, underwriters and arrangers
• Brokers, dealers and market makersInstitutions and Key Players
• Investors, borrowers, issuers, underwriters and arrangers
• Brokers, dealers and market makers
• The role of commercial and investment banks
• Exchanges and exchange traded products
• Banks and the ‘OTC’ markets
• Hedge funds
• Private equity
• Project finance
• Regulators: FSA, SEC, ECB, BIS

Case Study: Goldman Sachs

Capital Markets Concepts

• Marking-to-market and accrual accounting
• Asset allocation
• Leverage/gearing
• Benchmarking and relative value
• Carry, arbitrage and inefficient markets
• Discounted cash flows and internal rates of return
• Physical delivery and contracts for differences
• Long, short and square
• Hedging, trading and market making
• Symmetrical and asymmetrical risk profiles
• Mergers and acquisitions

Exercise: Leverage ratios, returns on equity and competition between the banks

Case Study: What we know and don’t know about finance

Case Study: Porsche, Volkswagen and the hedge funds

Capital Markets Products

• Debt capital markets products
  - Fixed income products
  - Fixed rate bonds
  - Floating rate notes
• Money market products
• Equity capital markets products
  - IPOs
  - Secondary offerings
• Hybrid products

Case Study: Morgan Stanley and France Telecom

The Equity Markets

• The equity risk premium and asset allocation
• Global equity
• Equity valuations

Exercise: Identifying value in the global equity markets

• Equity research
• Equity trading and equity trading strategies
• The IPO market
• The secondary market

Case Study: Pandora

Case Study: Google

Case Study: ‘Spinning’ – regulating the equity markets

The Bond and Fixed Income Markets

• Understanding and applying discounted cash flow techniques
• Calculating bond prices
• Calculating bond yields
• The relationship between price and yield
• Day count conventions
• Covenants
• Benchmarking and credit spreads
• Asset swaps and CDS spreads
• The relationship between the bond markets and the loans market
• Credit ratings
• Pricing a corporate bond

Exercise: The price/yield relationship

• How borrowers tap the bond markets
• The role of arrangers and underwriters
• The importance of investors
• The dynamics of price and yield
• Floating Rate Notes

Case Study: FMC 5.2% 2019

Case Study: Kraft Foods Inc

Securitisation

• True sales
• Orphan owner structures
• Off-balance sheet ownership
• Bankruptcy remoteness
• Ring fencing
• Credit enhancement

Case Study: Ford Motor Credit

The Foreign Exchange and Money Markets

• Using and understanding LIBOR and other IBORs & IBIDs
• Treasury bills
• Commercial paper
• Certificates of deposit
• Bankers acceptances
• Repos and reverses
• Spot and forward foreign exchange

Exercise: Spot foreign exchange

• Forward foreign exchange
• Forward outrights and FX swaps
• FX swaps and currency swaps

Case Study: The carry trade

Case Study: Vodafone’s multi-currency debt management

Case Study: Making better hedging decisions

The Derivatives Markets: Forwards, Futures

Swaps and Options

• Trading and hedging with derivatives
• Derivatives markets participants
• Why financial institutions and their customers use derivatives

Forwards and Futures Markets

• OTC and exchange traded products
• Initial and variation margins
• Forwards and swaps
  - FRA strips and futures hedging
  - Arbitrage relationships
  - Futures trading

Options Markets

• Symmetrical and asymmetrical risks
• Intrinsic value and time value
• In, at and out of the money options
• Trading with options
• Hedging with options

Case Study: NatWest

The Swaps Markets

• Interest rate derivatives
• Trading and hedging strategies
• Currency derivatives
• Debt management
• Currency overlay
• Trading strategies
• Commodity derivatives
• Cash and carry arbitrage
• Energy derivatives
• Equity derivatives
• Credit derivatives
• Structured products
• Issuers’ perspective
• Investors’ perspective
• Banks’ perspective

Case Study:

• Interest rate derivatives: managing Vodafone’s risks
• Currency derivatives: accessing global capital markets
• Commodity derivatives: cash and carry arbitrage
• Energy derivatives: gas futures hedging
• Equity derivatives: equity index swaps and asset reallocation
• Credit derivatives: managing credit risk and the credit cycle
• Structured products: expressing a view

Capital Markets: Future Trends

• The credit cycle and liquidity issues
• Lessons from the last crisis
• Why are there so many banking crises
• Impact of regulation on the markets

Case Study: The rules of risk management – and why we ignore them 

This is the easiest and quickest way for delegates to get a clear understanding of how the markets work. You will examine the key players, and all that motivates them by analysing actual deals and data. Packed with practical exercises, you will master the art of reading the financial press to analyse its content and build your knowledge of the banks, investors, borrowers and issues. Analyse today and prepare for tomorrow!