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A comprehensive and hands-on interactive program, using case studies, exercises and group sessions developed to ensure that the delegates gain the understanding of
- how the industry and their specific interactions/responsibilities interact within the overall scope of the international financial markets
- demonstrates the business links in their important contribution to the overall process of back-office operations and give them a sound background to the tasks undertaken and
- exposure to the current best practices in managing operational & operations risk.
Who should attend:
Settlements, middle and back office staff, brokers, global & domestic custodians, treasury, cash management, fund managers and IT staff. Delegates are expected to have a general knowledge of settlement operations.
Course categories:Back Office Courses, Operations Settlements Clearing Courses, Securities Services/ Securities Finance, Back Office Inhouse Courses , Operations settlements Clearing Inhouse, Securities Services/ Securities Finance Inhouse
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HOW THE FINANCIAL MARKETS WORK
An introduction to the different capital markets products and instruments
➢ Analysis of different asset classes
How different securities are issued and why:
➢ Bonds
➢ Equities
➢ Derivatives
The bond and fixed income markets
➢ The origins of the market
➢ A definition of bonds - who uses the bond markets and why
➢ Bonds Vs other asset classes
➢ Asset allocation
➢ Types of 'hybrid' instruments - convertibles, warrants and other structured products
Overview of derivative products
Understand their characteristics and uses
➢ The origins of the market
➢ Futures and options
➢ OTC Vs exchange traded derivatives
➢ Commodities
➢ Credit derivatives
➢ Types of futures and the role of the clearing houses
The money markets
➢ Definition of domestic and international markets
An overview of money markets products:
➢ Certificates of deposit
➢ Treasury bills
➢ Commercial paper
➢ Bankers acceptances
➢ Repos
➢ The role and purpose of the money markets
The foreign exchange market
➢ The role of the Forex market
➢ How they are used - the exchanges and trading techniques
➢ Relationships between the spot, forward and interest rate markets
➢ Relationship with the money markets
The swaps market
➢ Definition of swaps
➢ Types of swaps: currency and interest rates
➢ Why swaps are used and by whom
➢ Pricing and trading swaps
Future trends influencing the global financial markets
➢ The credit cycle & liquidity issues
➢ Growth of the corporate bond market
➢ European and US investment trends
➢ Developments in Pension Funds
OPERATIONS AND SECURITIES MANAGEMENT
Managing and developing the operations structure
➢ Role of operations teams in securities
➢ Derivatives and treasury operations
➢ Relationship with front and middle office
➢ Key challenges in the operations environment
The role and impact of technology in the operations environment
➢ Using technology
➢ System implementation and migration projects
➢ Problems and benefits associated with technology
➢ Managing static data
Treasury operations and accounting
➢ Netting
➢ Core calculations
➢ Interest
➢ Discounting and present value
➢ Settlement amounts
➢ Payment systems
➢ Funding process for trading
➢ Cash flow predictions
➢ Repos
➢ Reconciliation of accounts
Securities Clearing & Settlement
➢ Principles of securities settlement
➢ Demystifying the jargon
➢ The G30, IOSCO and ISSA
➢ Describing the steps in a typical trade cycle
➢ Industry initiatives driving change in the market
The role of the exchanges and clearing houses
➢ What is the role of exchanges
➢ What is the role and function of the clearing house
➢ Assessing the impact of the consolidation of exchanges and clearing houses across markets
The role of the settlements department
➢ Importance of settlement
➢ Relationship and responsibilities
➢ Management information: management reports
➢ Explaining the relationships with counterparties dealt within the settlement of typical trades
Settlement conventions
➢ What are they and how do they differ by securities class in major markets?
➢ International market conventions
Processes in settlement
Pre-settlement:
➢ Input of settlement instructions
➢ Input scenarios
➢ Matching
➢ Monitoring transactions
➢ Changing transaction input
Settlement:
➢ Priorities and queues
➢ Circle processing
➢ Monitoring transaction settlement
➢ Electronic transfer of title (ETT)
➢ Bad deliveries
Overcoming problem areas:
➢ The importance of timing
➢ Cash management and FX - timing and importance
➢ Netting
➢ Settlement for residual securities
➢ The importance of reconciliation
Clearing & Settlement Market Service Options
➢ STP options
➢ Role of third party organisations
➢ CHAPS/CHIPS
➢ Euroclear
➢ CREST
➢ DTCC
➢ Legal requirements
CUSTODY MASTER CLASS
Managing and developing the operations Global custody core services
What services clients should demand and expect from their custodian/agents
➢ Settlement
➢ Safekeeping
➢ Income collection
➢ Corporate actions
➢ Cash funding
➢ Tax management
➢ Reporting
➢ Banking facilities
Core Services Versus Added-value Products
➢ What services a custodian should be offering its clients
➢ Value added products
➢ Response to market demands/forces
➢ Pricing criteria
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Global, Regional, Best in Market, Coverage
➢ Master custody agreements
➢ Requests for Proposals (RFP)
➢ Service Level Agreements (SLAs)
➢ Bundled or unbundled fees
➢ Pros & cons
➢ Sub-custodian network
➢ The good with the bad
➢ Options available
Corporate actions:
Selection of corporate action types, including:
➢ Coupon payments (fixed & floating rates)
➢ Principal payments
➢ Bond conversions
➢ Bond redemptions
Mandatory event lifecycle, including:
➢ Announcement capture
➢ Ascertaining entitlements
➢ Counterparty claims
➢ Calculation of resultant entitlements
➢ Updating books and records
➢ Settlement with custodian and counterparties
FUNDAMENTAL OF DERIVATIVE OPERATIONS
Common uses of derivatives
➢ Trading and arbitrage
➢ Asset allocation
➢ Income enhancement
➢ Hedging
Settlement conventions
➢ Process used for clearing derivatives
➢ Exchange traded derivatives
➢ OTC derivatives
➢ RepoClear
➢ SwapsClear
➢ Exchange for physical
➢ Cash and physical delivery
➢ Delivery, exercise and assignment
➢ Clearing & settlement of derivatives
➢ The role of the clearing house
➢ The global clearing process
➢ OTC settlement
➢ Reconciliation: internal & external
➢ Margining: initial & variation
➢ Collateral management
➢ Reporting
➢ Deliveries
Regulation and compliance
➢ Overview of the regulation of derivatives
➢ Capital requirements
➢ Accounting treatment
➢ Client agreements
➢ Clearing house default management
Controlling derivative risk
➢ Overview of derivative risk
➢ Transaction control
➢ Management reporting
➢ Contracts and agreements
Derivative documentation
➢ Understanding the terminology
➢ Purpose of documentation
➢ Purpose of confirmation
➢ OTC documentation
COMMON CHALLENGES FACING TREASURY OPERATIONS & CASH MANAGEMENT
Treasury: The strategic and value-added cash management partner
➢ Visibility
➢ Access/timeliness/speed of information
➢ Completeness of information
➢ Workflow management
➢ The life of a deal
➢ Processing overview
➢ Input
➢ Verification and confirmations
➢ Settlement and netting
➢ Real-time gross settlement systems (RTGS)
➢ End-of-day clearing systems (EOD)
➢ Continuous linked settlement (CLS)
➢ Reconciliations
➢ Accounting
➢ Daily cash management
➢ Liquidity
➢ Counterparty exposure
➢ Bank relationships/administration
➢ Compliance, control and documentation
➢ Overcoming the challenge
➢ Summary and key points
OPERATIONAL RISK - NO EXCUSES
The focus of this session will ensure delegates understand the specific risks associated with operations processes
The 10 commandments of operational risk
Factors influencing the importance of operational risk
➢ Market consolidation and margin squeeze
➢ The complexity and sophistication of IT systems
➢ Hidden risks posed by complex financial products
Identifying and classifying operational risk categories
➢ Fraud and theft
➢ Systems and operations
➢ Communications
➢ Documentation
➢ Improper business or market practices
➢ Suitability, disclosure and fiduciary
➢ Unauthorised activity
➢ Transaction capture, execution and maintenance
Analysing specific risks
➢ Technology
➢ People
➢ Process
➢ External/counterparty
Generic approaches
➢ Do nothing
➢ Insurance
➢ Risk profile mapping
➢ MIS
➢ Straight Through Processing (STP)
➢ Processes and controls
➢ Systems reconciliations
Soft issues
➢ Building a risk awareness culture
➢ Building consensus on risk allocation policies
➢ Building sense of responsibility for risk reduction
➢ Corporate governance
| Case studies, exercises and short multiple-choice examinations will be included in components of the program. In-depth securities market profiles will be produced for markets covered in the case studies. |
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