Managing FX Operational Risk

Course description

An intensive 2 day course exploring FX trading processes and risk management strategies.

The foreign exchange market is the largest and most liquid sector of the global economy and serves as a primary mechanism for making payments across borders, transferring funds, and determining exchange rates between different national currencies.

The last decade has seen the diversification and massive expansion of the sector. The increased complexity plus higher trade volumes have necessitated constant changes in trading procedures, trade capture systems, operational procedures and risk management tools.

This course seeks to provide a solid foundation to all parties involved in foreign exchange activities whether at executive, marketing, audit or operational levels into how the actual trading processes work, what the risks are and how these can be mitigated by using clearly defined Standards of Best Practice.

What will you learn

By the end of the training participants will:

  • Clearly understand each of the stages and processes of foreign exchange trade and settlement, and fully comprehend how each phase is related to the larger process flow
  • Have a clear understanding of operational risk in the context of FX and be able to manage effectively all the processes
  • Obtain a clear insight into practices that may mitigate some of the operational risks that are specific to the FX industry
  • Assess the reduction of operational costs
  • Understand the key best practices that are used in the FX industry, current developments and future directions

Main topics covered during this training

  • Analysis of the Foreign Exchange marketplace
  • How foreign exchange operates
  • Types of risks that effect FX operations
  • Foreign Exchange best practice
  • The Foreign Exchange process flow
  • Strategies for mitigating the FX operational risks
  • Pre-trade preparation
  • Trade capture
  • Confirmation and netting
  • Settlement and Nostro reconciliation
  • Accounting & financial control processes

Who should attend

Operations and business staff at all levels involved in any aspect of FX. This will include:

  • Operational Risk Managers and Executives
  • FX Dealers
  • Brokerage Houses Porfessionals
  • Money Managers
  • Commodity Trading Advisors
  • Insurance Companies
  • Brokers/Dealers
  • Corporations
  • Participants in the Interdealer Market

Managing FX Operational Risk - A 2 Day Training Course

Day One

Session 1

The Foreign Exchange Marketplace 
We begin this course by setting the scene and examining nature and extent of the foreign exchange market.
  • The size of the market
  • Who the participants are (both key players and occasional users).
  • How the market is developing and its past growth.
Basic Foreign Exchange Principles
  • How foreign exchange operates.
  • We provide a range of examples that clearly illustrate the operation of foreign exchange markets in terms of the transactions, how they are processed and how they are settled.
  • What does the jargon mean – we explore foreign exchange definitions.
  • Foreign exchange settlements – Correspondent banking and Continuous Linked Settlement (CLS).
Session 2
 
Operational Risk
  • What is risk?
  • What are the different types of risks that effect foreign exchange operations?
  • Why operational risk is ‘special’
  • How these risks effect the bank
The Theory of Managing Risk 
We explain the basic Operational Risk Model in action, dealing with all the relevant components as they interact with one another
  • The Model
  • Managing operational risk
  • Risk analysis
  • Risk impact/frequency
Case Study. ‘A bank, a foreign exchange trading system and operational risk’. This case study illustrates all the aspects of operational risk and is drawn from recent events in a major bank’s trading division.
Session 3
 
Foreign Exchange Best Practice
  • What are best practices?
  • We explore how using these practices may also help to reduce the level of risk in the foreign exchange market more generally. How can these practices help reduce operational costs?
Future Trends in Foreign Exchange
  • What are the major trends in the foreign exchange market today and how will they foreign exchange operational risk
  • Management’s role in effective risk mitigation.
  • Why operational risk is ‘special’.
The Foreign Exchange Process Flow
In this session we look at the generic view of the foreign exchange process flow, form pre-trade preparation, trade capture, confirmation, netting,  settlement, nostro reconciliation, and the accounting & financial control processes. This lays the foundation for a detailed examination of each of these processes, the activities that they entail and the risks and their mitigation.
Examples are given for each of the processes involved to give the delegate a clear understanding of the key operating and risk issues involved.
Day Two
Using Foreign Exchange Best Practice to Manage Risk 
In today’s four sessions we offer a collection of practices that will assist in mitigating some of the operational risks that are specific to the foreign exchange industry
We examine each of the seven processes on the following basis;
The individual process, what it is meant to achieve and now it operates (we cover in turn pre-trade preparation, trade capture, confirmation, netting, settlement, nostro reconciliation, and the accounting & financial control processes).
  • What are the risks?
  • The best practices used to mitigate these risks.
For each process we show below some of the mitigation factors that will be covered in detail.
Session 1
 
Pre-trade preparation
  • Know your customer, Documentation requirements, Master netting agreements, Agreement on trading and operational practices.
  • Trade capture
Entering trades, Using Straight-Through-Processing, Use of real-time credit monitoring, Standing settlement instructions.
Session 2
 
Confirmation
Special requirements for confirming by non-secure means (structured or nonstandard trades, confirming by telephone), Controls electronic trading platforms, Verify expected settlement instructions, Netted transactions, Internal transactions – Block trades and split allocations, Third-party advices, Confirmation matching process, Exception processing and escalation procedures.
Netting
  • Online settlement netting systems, Bilateral net amounts, Cut-offs for netting, Consistent operational practices and documentation.
Session 3
 
Settlement
  • Real-time nostro balance projections, Electronic messages for expected receipts, Cancellation and amendment facilities, Payment failures, Thee settlement process and settlement exposure, Crisis situations outside your organization.
Nostro reconciliation
  • Nostro account reconciliation, Identify non-receipt of payments, Operational standards for nostro account users.
 
Session 4
 
Accounting & financial control processes
  • General Ledger reconciliation, Daily position and Profit & Loss reconciliation, Daily position valuation, Trade prices for Off-Market Rates.
  • General Best Practices for Managing Foreign Exchange Operations Risk
  • Segregation of duties, Business and operational roles, Understand operational risks, Procedures for introducing new products, new customer  types, or new trading strategies, Control system access,  Audit/risk control groups, Operational performance measures, Outsourcing & industry standards and best practices, Record keeping,  Contingency plans

 

Trainer

Richard holds a B.S. in International Business Administration from San Jose State University in California. His professional experience spans 19 years, 5 of which were spent with Wells Fargo Bank. Another 5 were spent honing his global banking skills, when Richard was involved with International Trade Finance, Real Time Gross Settlement and Cross Border Banking. The past 9 years have been in the private and high-tech sectors providing high-level consulting services, business analysis, project management and training to a wide range of banking clientele across the globe.

He has spent extensive time servicing a diversity of “financial institutional” clients, in South Africa, Poland, Sweden, Ireland, Netherlands, Greece, Bermuda, Malawi, United Kingdom and across North America. Clients include AIB Bank, Eurobank, ABSA Bank, CitiBank, Swedbank, INDEbank, IBM, Montran and Fundtech, as well as many others.
Richard has also filled the role of advisor to central banks on payment systems and technical payments issues. Furthermore, key staff from the Bank of England, South African Reserve Bank, Central Bank of Ireland and Bank of Portugal who have attended training sessions presented by Richard.

 

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:

  • Making a bank transfer
  • Debit/credit card
  • Cheque payable to Eureka Financial Ltd. - only within UK

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
  • Take away course materials
  • Course Certificate
  • 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
  • Passport expiry date

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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