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Markets and Their Workings


An introductory seminar in the way that international capital markets function. This course will appeal to those who wish to consolidate a basic knowledge of the market mechanisms and how it functions in today’s financial markets. This course deals with many derivative products and securities and has extensive review of structures and pricing considerations.

 Will learn:

 ·        Market structure, participants and products

·        Investment bank and investor perspectives

·        Tax and regulatory aspects of markets

·        Economic function and capital allocation using financial products

Audience:  This course will appeal to persons with a basic working knowledge of markets who wish to consolidate that knowledge. Previous experience would be advantageous.

·        Less experienced Traders, sales, support, Internal Audit

·        Less experienced Fund managers

·        Less experienced Risk management


Table of Contents

1.      Examining the international capital and banking markets: Explaining the economic background – market economics. Identifying the market players. Analysing economic variables /indicators /drivers. Sources of information and its effect on the market

2.      Examining the major instruments: Money market instruments. Capital market instruments. Foreign exchange markets. Equity markets

3.      Money market instruments: How they work. How they are priced. How prices are quoted. Yield curves. Using yield curves to assess value

4.      The bond markets: Eurobond markets and US bond market. Junk bonds. Originating, syndicating and pricing bonds. Bond ratings. Relationship of the government bond market with the swaps market [Bond types Government bond markets: US UK Germany France Japan Australia]. Warehousing. Documentation implications. Bond volatility and trading techniques

5.      The equities markets: Equities markets in the world. Issuing, pricing and valuing equity. Options on equities: convertibles, warrants, put options. Key stock indices and performance measurement. Trading and hedging with stock index futures and options. The implication of privatisation. Technology issues – screen-based trading.

6.      Foreign exchange markets: Principles of quoting. What causes exchange rates to move? –short term factors. Volatility of the forex markets. Liquidity of the spot and forward markets – the impact of the capital adequacy requirements. Currency trading blocks. Currency baskets. The relationship between the spot, forward and interest rate markets. Impact of Central Banks. The future?

7.      Interest rate forward contracts: Pricing issues. Using forward contracts

8.      Futures markets: Understanding futures. Futures exchanges and contracts. Commodity futures. Currency futures. Interest rate futures. New futures contracts. Hedging, trading and arbitraging with futures. Liquidity. Market characteristics and key players. Hedge ratios. Hedging techniques

9.      The swap market: Interest rate swaps. Currency swaps. Swaps valuation and hedging. Credit risk and swaps documentation. Warehousing and zero curves. Applications of swaps – examples. Market overview.  Case study: dual currency swap

10. The options market: Understanding options on: FX, Interest rates, Debt instruments, Equities, Commodities and swaps, OTC and exchange traded options. Option pricing theories. Hedging an option portfolio. Option trading and arbitrage. Liquidity considerations. Exotic options: Asian options, Lookbacks, Knockouts, Down and outs, Ups and ins, Options on options

11. Options as hedges: Buying vs. selling options to hedge. Comparison with futures and swaps. Hedging with American, European, Asian or exotics in-, at-, or out-of-the-money. Timing and basis risk

12. Options as an asset class: Portfolios of options – delta, gamma, theta, vega risks. Expressing views of volatility. Special risks of exotics

13.Regulatory issues: Implementation of the BIS Capital Adequacy Assessment Rules. Review of the BIS rules. Implications of the EC directives.  Plus, comparative study of implementation in the UK, USA and Japan

14.The regulation of market and credit risk


490 Pages of comprehensive and extensively illustrated Handout Notes (see samples here)

Plus copies of relevant TG2 Books/e-Books

Note: Seminars can be tailored to your trading, risk, client, and systems needs.  Submit your needs, and/or "cut/paste" from other Seminars (see entire "standard" list HERE)

    Get a Syllabus in more detail

    Sign Up for a scheduled course

    Sign Up for an in-house course


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Last modified: July 25, 2011