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Financial Instruments and Markets

Duration: 2 days
  • Recent Developments in Global Financial Markets
  • Equity Markets and Instruments
  • Fixed Income Markets and Instruments
  • Money and FX Markets
  • Listed and OTC Derivatives
  • Regulatory Changes and the New Infrastructure
  • Structured and Leveraged Finance
The objective of this seminar is to give you a good, practical and all-round understanding of global financial markets and of their instruments.

We start with a general overview and discussion of recent developments in the global financial markets, including trends such as globalization, credit crisis, European debt and currency crisis, new regulation (Basel III, Solvency II, MiFID II) etc.

We then take a closer look at equity markets. We present and describe different types of equity instruments, and we explain how these instruments are used in corporate financing. We also explain, how they are traded in the primary and secondary markets, and we discuss their risk and return characteristics from the investor’s perspective.

After this, we turn to look at fixed-income markets. We explain the differences between “money markets” and “capital markets”, and we give examples of instruments traded in these markets. We also look at the instruments’ role in public and corporate financing, and we describe their investment characteristics.

Further, we explain developments in the global money and FX markets and explain the importance of these markets in international financial intermediation. We also discuss how the global credit and sovereign debt crises have affected the functioning of money markets, in particular the interbank market.

We then give a thorough introduction to derivatives markets. We explain the main characteristics of derivative instruments, and we discuss the differences between listed and OTC instruments. We also discuss the regulatory changes and the move to centralized trading and clearing. We present and describe instruments such as futures, options, swaps, credit derivatives, and we explain their uses in trading and risk management.

Finally, we look at developments in the markets for structured and leveraged finance. We present structures such as “asset-backed securities” and “leveraged loans”, and we explain their uses from both a financing and an investing perspective. We also discuss possible future developments in these financing techniques, including the possible use of securitization in the financing of public debt.

Day One

09.00 - 09.15 Welcome and Introduction

09.15 - 12.00 Recent Developments in Global Financial Markets

  • Brief History of Market Developments
  • Overview of Types of Financial Instruments and Markets
  • The Global Financial Crisis and the European Debt Crisis
  • Regulatory Reform and the Changing Financial Landscape

Equity Markets and Instruments

  • Main Characteristics of Equity Instruments
  • World Equity Markets
  • The Role of Equity Instruments in Corporate Financing
  • How Equities are Traded
    • Primary and secondary markets
    • Case study: “High Frequency Trading” and its market impact (the “Flash Crash” etc.)
  • Mutual Funds and ETF’s
  • Risk and Return Characteristics of Equity Investments
    • Historical performance
    • P/E, P/BV and other important ratios
    • Measuring equity risk in a portfolio context
  • Practical Case Studies and Exercises

12.00 - 13.00 Lunch

13.00 - 16.30 Fixed Income Markets and Instruments

  • Main Characteristics of Fixed Income Instruments
  • Overview of Global Fixed Income Markets
    • Treasury bills and government bonds
    • CP’s and corporate bonds
    • Agency securities
    • Convertibles and other hybrid instruments
  • How Fixed-Income Instruments Are Traded
    • Primary and secondary markets
  • Risk and Return Characteristics of Fixed-Income Instruments
    • Historical performance
    • Interest rate risk, inflation risk
    • Credit risk, sovereign risk, prepayment risk and liquidity risk
    • Measuring risks in a portfolio context
  • Case Studies and Exercises

Day Two

09.00 - 09.15 Recap

09.15 - 12.00 Money and FX Markets and Instruments

  • Global Money and FX Markets
  • Types of Instruments
    • Deposits, T-Bills, CP's, CD's
    • Spot, forward and forward-forward transactions
  • How the crisis has impacted the money and FX markets
  • The Future of the Euro
  • Measuring and Managing FX Exposure

Derivative Markets and Instruments

  • General Introduction to Derivatives and their Characteristics
  • Types of Derivates Instruments and Markets
  • Forwards vs. Options
  • Listed vs. OTC Markets
  • Futures and Options Markets
    • Mechanics of futures and options
    • Practical examples of equity, index, currency and bond futures and options
    • How futures and options are traded
    • Using futures and options for hedging

12.00 - 13.00 Lunch

13.00 - 16.30 Derivative Markets and Instruments (continued)

  • OTC Markets
    • FRAs, swaps, caps, floors and swaptions
    • Credit derivatives
    • The move to standardization and centralized clearing
    • ISDA “Big Bang” protocol
    • Using OTC derivatives in risk management and financial engineering
  • Case Studies and Exercises

Structured and Leveraged Finance

  • Asset-Backed Securities
  • Synthetic and Hybrid Securitizations
  • Leveraged and Hybrid Loans
  • Case Study

Evaluation and Termination of the Seminar