Foreign Exchange (FX) & Money Markets

Course overview The foreign exchange and money markets are worth trillions of dollars and are the pivot of the financial markets, providing funding, investment opportunities and the conduit between all other financial markets. In recent years, the importance of the money markets has become even greater as financial institutions focus more closely on the management and diversification of their sources of liquidity, apply greater discipline to their funding and examine the attractions of short term investment and trading strategies. This course provides a firm grounding in the instruments and activities of the international money and FX markets, sweeping away the confusion that can be created by the scale, speed and apparent diversity of the markets. It focuses on the current profile of the markets and offers up-to-date insights. The course also emphasises the integrated nature of the market - in particular, how different instruments perform the same or similar functions and the opportunities this provides for arbitrage and hedging. It also analyses the liquidity characteristics and risks of different instruments and funding strategies. Summary of course content The FX and money markets and its participants The impact of Central Banks Money market products FX products Risk management issues The latest regulatory developments Methodology This course is an intermediate programme taught with highly interactive and intensive group exercises and case studies. Who should attend? Money market managers Corporate finance executives Treasury executives Relationship officers Foreign exchange executives Accountants and auditors FTS Eligible This programme is approved for listing on the Financial Training Scheme (FTS) Programme Directory and is eligible for FTS claims subject to all eligibility criteria being met. Please note that in no way does this represent an endorsement of the quality of the training provider and programme. Participants are advised to assess the suitability of the programme and its relevance to participants’ business activities or job roles. The FTS is available to eligible entities, at a 50% funding level of programme fees subject to all eligibility criteria being met. FTS claims may only be made for programmes listed on the FTS Programme Directory with the specified validity period. Please refer to www.ibf.org.sg for more information. Supporting publication:
Day 1 Overview What the money market does: liquidity and risk management The market participants Difference between money markets and capital markets The interface between FX and money markets The Euromarkets Current market overview The role of central banks and their influence on the markets Key economic indicators Monetary policy Foreign exchange operations Portfolio management Stability and supervision Payment systems Treasury management in financial institutions and corporations Balance sheet management Cash management Liquidity management / funding Asset liability management Interest rate risk management Currency management Forecasting Stress testing Transfer pricing Cash products Deposits and deposit indices Traditional money market securities Modern money market instruments Nature and function Marketability Risk issues Repos The mechanics Repo types Margining Collateral Credit exposures Money market forwards, futures and swaps Futures FRAs Interest rate swaps Exchange-traded vs. OTC markets The use of derivatives Hedging Arbitrage Speculation Risk issues Practical example Interest rate options IR options: mechanics and terminology Relationship to cash instruments Caps and floors Volatility Historical volatility Implied volatility The Greeks Option strategies Practical example Day 2 Foreign exchange History of the foreign exchange market Conventions Structure of the market FX forwards Forward FX mechanics Uses of forwards Hedging via forward FX Risk issues Foreign exchange swaps Forward FX mechanics Uses of FX swaps Hedging via FX swaps Risk issues Foreign exchange options FX options: mechanics and terminology Volatility The Greeks Option strategies Exotic options Practical example Key currencies and their developments US Dollar Euro Chinese Yuan Gold Day 3 Risk management for FX and money markets Risk governance/infrastructure/roles and responsibilities Credit risk Settlement risk Counterparty default risk Internal rating for customers using derivatives Credit risk mitigation Credit issues under Basel III Market risk Interest rate risk Spread risk Currency risk Commodity risk Market risk tools Duration Sensitivities Value-at-Risk Back-testing Liquidity risk Liquidity coverage (LCR) Net stable funding ratio (NSFR) Liquidity risk management Measuring liquidity risk Key liquidity ratios Operational risk Data collection Key risk indicators Self assessment Stress testing Key trading issues from the new banking reforms of Basel III and Dodd-Frank Act (DFA) Capital quality and quantity Capital ratios and buffers Risk-weighted assets Leverage Liquidity coverage ratio Net stable funding ratio The Volcker Rule under DFA/Proprietary trading Rating agencies under DFA Compensation under DFA Relevant legal, operational and information technology issues Confirmations Master agreements Netting Margining Collateral management Credit support annex New product process Market data Product control Information technology