Derivatives – Applications and Settlement Process

Course description

This practical 2 day course gives a detailed coverage of the major types of derivatives and how they are valued and traded. Delegates will also have a chance to learn about the process of margining and central clearing of derivatives which is broadly discussed at the moment by the industry and regulatory bodies.

The course is suitable for professionals who have some knowledge of derivatives but would benefit from a broader understanding of these instruments and how they are settled for margining purposes.

What will you learn

By the end of the course delegates will:
  • Explore the use of derivatives for different purposes and by different market players
  • Work out the risk reward characteristics
  • Understand the role of the exchange and clearing houses
  • Learn about the margining and settlement system

 


Main topics covered during this training

  • Constructing futures and forwards contracts
  • Options, Warrants and OTC – Contracts and pay off profiles
  • the role and function of the clearing house and the relationship between end users, the exchange and clearing members
  • Exploring the margining system for futures, options on futures, and equity options and futures
  • Valuation and settlements of swaps
  • Recent developments in CDS market
  • Detailed analysis of market application of derivatives

Who should attend

From Banks, Fund Management, Exchanges and Clearing Houses:

  • Derivatives Traders
  • Settlement Professionals
  • Risk Managers
  • Fund Managers
  • Product Managers
  • Middle Office
  • OTC Derivatives Clearing
  • Auditors
  • Regulators
  • Operational Risk Managers
  • Software Developers

Derivatives Applications and Settlement - A 2 Day Programme

Introduction

  • Definition and history of derivatives
  • Who are the main users of derivatives and why?
  • Where are derivatives traded? – OTC v exchanges
  • What is the role of the clearing house?
  • Why are derivatives marked to market?
Futures and Forward Contracts
This section explains in detail how futures and forwards contracts are constructed and looks at the different types of products.
  • Defining a futures v a forward contract key terminology contract specifications
  • Basic pricing theory cost of carry relationship basis, and carry return arbitrage and futures/forward prices
  • Main types of futures/forwards bonds, stir, equity, commodities, currencies FRA’s and swaps calculating the tick value
  • Basic hedge ratio adjusting the hedge ratio
  • Spread trading strategies intra and inter contract spreads
  • How do you work out profit and loss?
Options, Warrants and OTC – Contracts and pay off profiles
  • Defining an option call/put obligations and rights
  • terminology explained
  • Types of options options on futures and the underlying product OTC v exchange options, warrants and covered warrants, convertibles
  • Basic option pricing time value and intrinsic value overview of the Greeks
  • Users and uses versus futures profit loss profiles at expiry
  • Popular hedging and trading strategies portfolio protection and enhancement combining positions
Role of the Clearing House
This section provides an insight into the role and function of the clearing house and the relationship between end users, the exchange and clearing members.
  • Day in the life of a trade
  • Operations of the CH
  • Clearing and non clearing members
  • Treasury operations and risk management
  • Guarantees and netting
  • Types of accounts
The Margining System
The following section explains in detail how the margining system works using futures, options on futures, and equity options and futures as detailed examples. Plus the role performed by the Clearing house.
  • Collateral, delivery and exercise
  • Variation margin on futures
  • Variation margin on options based on futures
  • Equity net liquidation value
  • Portfolio based systems for initial margin – SPAN
  • Inter month charge, credits
SWAPS – Valuation and Settlement
  • Defining a swap
  • terminology explained
  • Interest rate swaps, fixed v floating
  • Uses and applications of swaps managing interest rate exposure arbitrage using swaps
  • How do you price a swap? creating a zero spot curve using STIR futures
  • Pricing an asset swap relationship between repos and swaps
  • Currency swaps and equity swaps uses and applications
  • Credit Default Swaps and Total Return Swaps use of CDS in structured credit products CDOs – CMO, CBO, CLO
  • Recent developments in CDS market
Application of Derivatives
This section explains in more detail the major applications of derivatives from a multitude of different types of users
  • Who use derivatives? Corporations, funds, banks, market makers, dealers
  • How are derivatives used in fund management? Asset allocation, basic portfolio protection and enhancement hedge fund uses of derivatives
  • Derivatives in treasury operations managing interest rate and currency risk
  • Using derivatives to trade spreads intra and inter contract spreads
  • How are derivatives used in structured products?
  • Option trading strategies common spreads

 

Trainer

Paul has over 20 years experience of working and teaching in the financial and derivatives industry.  Paul joined the London International Financial Futures and Options Exchange (LIFFE) in 1988, spending several years on the exchange trading floor before transferring to LIFFE’s Business Development Department.

During his time at LIFFE, Paul worked in the fields of broker relations, product research and development, marketing, market automation and education. Paul was Head of Education at LIFFE, before leaving in Dec 1998 to pursue a freelance career in financial education and consultancy.
Paul is also a qualified teacher and has extensive speaking experience both in the UK and abroad, covering all the major aspects of financial markets.  Paul has taught delegates from virtually all of the worlds leading investment banks, funds and trading houses. His list of clients includes JP Morgan, Goldman Saches, Credit Suisse, Societe Generale, Deutsche Bank, Merrill Lynch, Morgan Stanley, Barclays Capital among others.

 

FAQ

We offer banking and finance courses as well as soft skills and business management training. You can either attend an open public course in London or Dubai or arrange customised in-house training to be delivered in any of your offices worldwide.

Most of our public courses are run over 2 full days. Some programmes are offered as a 1 or 3 day training.

In-house training is tailored to client’s requirements and can be organised over 1 day, 2-3 weeks or longer.

Public courses are organised mainly in London and Dubai. Occasionally we organise courses in other centres like Paris or New York. Check our public course calendar for the current list of programmes. We use a range of training venues, all in the centre of the cities and with excellent transport links to the airports and train stations.

In London we use venues in the centre (near Oxford Circus station or in Mayfair) or in the City (near Liverpool Street or Moorgate stations).

In Dubai our courses are organised in one of 4-5* hotels in the Deira district. Once you register we will send you detailed information together with accommodation options if required.

Our in-house courses can be delivered anywhere in the world. We work with over 25 trainers worldwide. Contact us do discuss your requirements. Check our list of available programmes.

Our courses are run in central locations from 9 a.m until 5-5.30 p.m. There are 2 coffee breaks and a lunch break. Lunch is always provided in the venue.

Dress code is smart casual.

All our programmes are taught by senior specialists who have spent many years in their respective sectors, working as senior managers and head of departments, so they understand very well the market and the challenges you are facing.

The experience of our trainers allows us to create very practical programmes, focused on current market trends and challenges. You can be sure that you will gain the knowledge which can be instantly applied in your workplace after the course. You will be analysing real life case studies, take part in group exercises and discussions as well as role plays, whenever applicable.

We want our courses to be as practical and interactive as possible so we limit the number of participants in order to optimise your time with the trainer and allow you to ask questions which are important for you.

In order to understand your requirements and expectations, we will send you a pre-course questionnaire.

You will also receive post-course support so if you have any questions after you left the training, you are welcome to contact us.

There are 2 easy ways to register:

  1. Go to the course of your choice and click Register Now button to fill the registration page
  2. Email us to enquiry@eurekafinancial.com

After you register, we will send you registration confirmation and an invoice so you can arrange the payment. Please note that your place is not confirmed until we receive it.

If you register within Early Bird discount period, there’s limited time to arrange the payment in order to be eligible for the discount. You will find all the details on the invoice.

We don’t advise to make any travel and hotel arrangements until you receive full course confirmation from us.

We will send you venue and course details as soon as possible but most likely about 3-4 weeks prior to the course commencement.

You can pay by:

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Just mark preferred paying option on the registration form. Whichever form of payment you choose we will always send you an invoice.

If you pay by card, a 2.2% processing fee will be added. We will send you authorisation form so you can give us your card details.

Included in the price of a public course are:

  • Course tutorial
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  • Lunch on the days of the training as well as drinks and snacks throughout the course

The price doesn’t include accommodation, flights, transfers and any additional costs outside of the training venue.

Yes, we always offer Early Bird discount, so the sooner you register the more savings you can make. We also offer group discounts and if you register for 2 or more programmes at the same time.

If you are a full time student or unemployed, we offer a 25% discount of the full price of the training. Student ID or unemployment status confirmation is required to claim this discount.

If you attend one of our courses you will be entitled to a special discount for a year after the last course you attend with us. Also, if you have attended and recommended us to a friend, both you and your friend will receive a special discount. You will receive more information about it after you attend the course.

See our Customer Loyalty Discounts page for more details.

All our courses based in the UK are subject to the VAT charge of 20%. This fee is irrespective of the country of residence of the delegates.

You can, however, claim the VAT back by contacting UK tax office - HMRC, and filling the relevant form, as long as you comply with the following rules:

For Delegates coming from the EU countries

If you represent a registered business in another EU country, you can use the Refund Scheme to reclaim VAT you pay in the UK as long as all of the following apply:

  • You're not registered for VAT in the UK and don't have to, or can't be, registered here
  • You don't have a place of business or a residence in the UK
  • You don't make any supplies in the UK

You can find some more information here. In order to claim the VAT you have to fill Form 65.

For the Delegates from Non EU countries

If you represent a registered business in a non-EU country, you can use the Refund Scheme to reclaim VAT you pay in the UK as long as all of the following apply:

  • You're not registered for VAT in the UK and don't have to, or can't be, registered here
  • You don't have a place of business or a residence in the EU
  • You can only use the Refund Scheme if your own country operates a similar scheme and makes it available to UK businesses. If your country has its own Refund Scheme but doesn't let UK businesses use it, you can't claim under the UK Refund Scheme.
  • You don't make any supplies in the UK

If the following rules apply to you, please fill the 65A form and send it to HMRC.

If you are unable to attend the course, you can either send a replacement at no extra charge or, up to 20 working days before the training, you can transfer your booking to another course within the next 6 months for an additional fee of 25% of the full course value. Please note that you can only transfer once.

Alternatively, for cancellations requests received more than 20 working days before the course date we will offer a refund less an administration fee of 10% of the course price.

We regret that no refunds can be given after this period. Non-attendance without any notification will be charged at full rate.

Cancellations must be made in writing and reach our office 20 working days prior to the course date.

Your place on a course is not guaranteed until we receive the payment. All payments must be made in full before the course date.

All our trainers have been working for many years in their respective sectors before they begun to teach so they bring a wealth of practical experience to the classroom.

Most of them used to work for 15 or more years in the financial sector and corporate world, and were holding positions of Directors, VP and Senior Managers. Some of them have published books and have written articles for specialised magazines and newspapers including FT, The Independent, The Times etc. You can find detailed biography of each trainer on the page of the course you want to register for.

Yes, you will receive a Certificate of Attendance at the end of the course you attend.

If you have to apply for a Visa to attend a course in the UK, we will issue a letter to support your application. The letter will be issued only after the payment for the course has been made.

It is delegate’s responsibility to obtain a Visa and failure to do so will not make the participant exempt from the cancellation policy.

Anyone suspected of applying for a training course simply to gain a Visa letter will be reported to their embassy.

We will need the following information to issue an invitation letter:

  • Full name as it appears on your passport
  • Date of birth
  • Passport number
  • Passport issue date
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This topic can be arranged on in-company basis. If you have a group of 4 or more we can customise it and deliver in any location worldwide. Contact us to discuss your requirements

WHAT PAST DELEGATES SAY

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