Financial Markets

This introductory course will provide participants with a first class and detailed working knowledge of the key financial markets, their purpose, function, main activities and their regulation. It is intended to be part refresher, part educational and part challenging so that all delegates will derive the maximum benefit from it. Feedback and discussion will be actively encouraged throughout the sessions which are intended to be interactive not just reactive and factual.

The primary function is to ensure that by completion, all course delegates will be much better equipped to deal with clients and their ongoing needs and to put into context the services and markets in which they are trading and participating.

The Global Capital Markets

• What is a ‘financial market place’
• Historical development of today’s global financial market
• The role of the financial media
• Structure of the major capital markets:
  • Exchanges, Clearers, Regulators
  • The modern day surge in global investment
  • The different types of ‘Stock Exchanges’
  • Where Stock Exchanges fit in today’s markets
  • US, European, Middle Eastern and Asian Stock Exchanges

Financial Markets Regulation:

• Capital Adequacy Requirement
• Basel I
• Basel II
• Basel III and its implications
• Source for New Product Development

The Different Asset Classes and Their Markets

• What is traded on Stock Exchanges today?
• Equities – Common and Preferred
• Bonds – Corporate and Government
• Bonds – Fixed, Floating and Zero coupon, the Yield Curve
• Money Market instruments
• The currency markets
• Why do investors buy them, and what makes them sell?
• Income/Capital Gain
• The relationships between the various asset classes
• How Exchange traded and Over-The-Counter markets interrelate

Short Term Money Market

• Certificates of deposit
• T Bills
• Commercial paper
• Trade paper & BAs
• Market norms and practices
• Market participants

The Different Types of Stock Exchange investor

• Investors
• Fund managers
• Hedge funds
• Stock Exchange participants
• Investment banks, Stockbrokers, Hedge Funds and Prime Brokers
• Intra-market relationships – the buy and sell side of the industry

The Role of the Stock Exchange

• Where are these products traded?
• The importance of the OTC market
• The past development of Stock Exchanges
• The main Stock Exchanges in today’s markets
• US, European and Asian Markets and their differing architecture
• Asset classes traded on different Stock Exchanges around the world
• The major Primary and Secondary markets
• New York, Euronext, London, Shanghai, Hong Kong
• The attraction of “listed” companies to investors
• Using Stock Exchanges to pool liquidity and raise capital
• Methods of Capital Raising
• ‘Floating’ the company – different methods

Clearing & Settlement

• Settlement and settlement risk
• The different Settlement Conventions in the major markets
• Equities, Bonds and derivatives
• The process for Derivatives Clearing
• The Central Counterparty (CCP)
• CCP services provided to Stock Exchanges
• Margin
• The security trade settlement process
• Pre-settlement
• Settlement
• Potential problems – unmatched trades, delayed settlement, bad delivery
• Stock Exchange Settlement Discipline
• The ‘life cycle of a trade’– how the process links up from trade to settlement
• The role of International Central Securities Depositories (ICSDs) and Central Securities Depositories (CSDs) – LCH.Clearnet, Euroclear,Crest, Clearstream International, the DTC

Custody

• The role of Custodians in the Stock markets
• Settlement and safe keeping
• Income collection and Corporate Actions
• Cash management and funding transactions
• Additional services
• Accounting
• Stock Lending and collateral management
• Trustee services
• Valuation reports

Alternative Investments

• What are Alternative Investments?
• Structured products - Risks and returns
• Hedge funds - Risks and Control
• Venture Capital Valuation issues, Risk and Control
• Private Equity/Angel Finance
• The use of derivatives in Asset Management
• OTC vs ETD
• Types of Derivatives used in Asset Management
• Futures
• Options
• Risks and controls associated with derivatives, including documentation, valuation and reporting issues

The Management of Quoted Equity Investment

• The risks associated with acquiring securities
• The risks associated with managing securities
• Risk associated with corporate actions
• Pricing of quoted equity investments
• Major sources of risk
• General controls within equity investment
• Risks associated with international equity markets

The Management of Quoted Fixed Income Investment

• The risks associated with acquiring and disposing of fixed income securities
• The use of ratings and associated risk issues
• The risks associated with pricing of fixed income securities
• Risk and controls within the corporate fixed income processing
• Risks associated with Government Securities
• Sovereign risk ratings
• The valuation of government securities
• Risk and controls within sovereign bond processing

The Market and Credit Risks of investing in Global Market

• Market risks
• VAR calculations
• Market risk modelling
• Credit Risks
• Measuring Credit risks
• Global Market Risks
• Money Market Risks
• OTC Risks
• Exchange risks