Fundamentals of Derivatives Operations Training Course

Attend this intensive training course and gain practical knowledge and understanding of:

• The most commonly used derivative instruments and their uses
• Settlement conventions for exchange-traded and over-the counter derivatives
• Clearing and settlement processes required to complete a derivative transaction
• The impact of corporate actions on derivative positions
• The current regulation, compliance issues and derivatives documentation

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Overview of derivatives products

• Understanding their characteristics and uses
  – exchange-traded vs. over-thecounter derivatives
  – futures and options
  – interest rate, currency and equity swaps
  – forwards and Forward Rate
• Agreements (FRAs)
  – commodities
  – credit derivatives
• The impact of the financial crash in 2008/2009

Workshop: Part I: Common uses of derivatives

• Trading and arbitrage
• Asset allocation
• Income enhancement
• Hedging

Part II: The involvement of the operations area

Settlement conventions

• Describing the process used for clearing derivatives
  – exchange traded derivatives
  – over-the-counter (OTC) derivatives
  – RepoClear
  – SwapClear
• Exchange for physical
• Cash and physical delivery
• Delivery, exercise and assignment

Clearing and settlement of derivatives

• The role of the clearing house
• The global clearing process
  – allocations and give-ups
  – pros and cons of global clearing
• OTC settlement
  – markitserv
  – confirmation process for OTC transactions
  – legal agreements
  – price check
  – book-keeping
  – RepoClear
  – SwapClear
• Reconciliation: internal and external
• Margining: initial and variation
• Collateral management
• Valuations
• Reporting
• Deliveries
  – financial
  – commodities

Impact of corporate actions on derivative products

• Common types of corporate actions and examples
• Role of the exchange
• Rights issues
• Capitalisation
• Takeovers, mergers and de-mergers
• Dividends

Regulation and compliance

• Overview of the regulation of derivatives
  – capital requirements
  – accounting treatment
• Client agreements
• Clearing house default management

Controlling derivatives risk

• Overview of derivatives risks
  – transaction control
  – management reporting
  – contracts and agreements

Derivatives documentation

• Understanding the terminology
• Purpose of documentation
• Purpose of confirmation
• OTC documentation

Exercise: Establishing a derivatives administration capability

Through case-study analysis and worked examples, the course will examine the most commonly used derivative products, the way in which derivative transactions are cleared and settled, the growing importance of corporate actions and their impact on derivative positions as well as the current regulatory and compliance issues – in the wake of the credit crunch and market crash. Benefit from learning a new set of skills you can put into practice as soon as you return to the office.