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Course Outline

The Global Capital Markets

  • Defining a financial marketplace
  • Historical evolution of today’s global financial markets
  • The influence of financial media
  • Structure of major capital markets:
    • Exchanges, Clearing Houses, and Regulators
    • The recent surge in global investment activity
    • Various types of Stock Exchanges
    • The role of Stock Exchanges in contemporary markets
    • Stock Exchanges in the US, Europe, the Middle East, and Asia

Regulation of Financial Markets:

  • Capital Adequacy Requirements
  • Basel I
  • Basel II
  • Basel III and its implications
  • Drivers for New Product Development

Asset Classes and Their Corresponding Markets

  • Current instruments traded on Stock Exchanges
  • Equities – Common and Preferred shares
  • Bonds – Corporate and Government
  • Bonds – Fixed-rate, Floating-rate, Zero-coupon, and the Yield Curve
  • Money Market instruments
  • Foreign exchange markets
  • Investor motivations for buying and selling
  • Income versus Capital Gain
  • Interrelationships among various asset classes
  • Interaction between Exchange-traded and Over-The-Counter markets

The Short-Term Money Market

  • Certificates of Deposit
  • Treasury Bills
  • Commercial Paper
  • Trade Paper and Bankers' Acceptances
  • Market conventions and practices
  • Key market participants

Investor Types in Stock Exchanges

  • Individual Investors
  • Fund Managers
  • Hedge Funds
  • Stock Exchange Participants
  • Investment Banks, Stockbrokers, Hedge Funds, and Prime Brokers
  • Intra-market relationships – The Buy-side and Sell-side of the industry

The Role of the Stock Exchange

  • Trading venues for these products
  • The significance of the OTC market
  • Historical development of Stock Exchanges
  • Major Stock Exchanges in current markets
  • US, European, and Asian Markets and their distinct architectures
  • Asset classes traded on global Stock Exchanges
  • Primary and Secondary markets
  • New York, Euronext, London, Shanghai, Hong Kong
  • Appeal of listed companies to investors
  • Leveraging Stock Exchanges for liquidity pooling and capital raising
  • Capital raising methods
  • Company ‘Floating’ – Various approaches

Clearing and Settlement

  • Settlement and associated settlement risk
  • Settlement conventions across major markets
  • Equities, Bonds, and Derivatives
  • Derivatives Clearing process
  • The Central Counterparty (CCP)
  • CCP services provided to Stock Exchanges
  • Margin requirements
  • The security trade settlement process
  • Pre-settlement phase
  • Settlement phase
  • Potential issues – Unmatched trades, delayed settlement, failed deliveries
  • Stock Exchange Settlement Discipline
  • The ‘life cycle of a trade’ – Linking trade to settlement
  • The role of International Central Securities Depositories (ICSDs) and Central Securities Depositories (CSDs) – LCH.Clearnet, Euroclear, Crest, Clearstream International, the DTC

Custody Services

  • The role of Custodians in stock markets
  • Settlement and safekeeping
  • Income collection and Corporate Actions
  • Cash management and funding transactions
  • Additional services
  • Accounting
  • Stock Lending and collateral management
  • Trustee services
  • Valuation reports

Alternative Investments

  • Definition of Alternative Investments
  • Structured products – Risks and returns
  • Hedge funds – Risks and control mechanisms
  • Venture Capital – Valuation issues, Risk, and Control
  • Private Equity and Angel Finance
  • Use of derivatives in Asset Management
  • OTC vs. Exchange-Traded Derivatives (ETD)
  • Types of Derivatives used in Asset Management
  • Futures
  • Options
  • Risks and controls related to derivatives, including documentation, valuation, and reporting

Management of Quoted Equity Investments

  • Risks associated with acquiring securities
  • Risks associated with managing securities
  • Risks associated with corporate actions
  • Pricing of quoted equity investments
  • Primary sources of risk
  • General controls within equity investment
  • Risks associated with international equity markets

Management of Quoted Fixed Income Investments

  • Risks associated with acquiring and disposing of fixed income securities
  • Use of ratings and associated risk issues
  • Risks associated with pricing fixed income securities
  • Risk and controls within corporate fixed income processing
  • Risks associated with Government Securities
  • Sovereign risk ratings
  • Valuation of government securities
  • Risk and controls within sovereign bond processing

Market and Credit Risks in Global Markets

  • Market risks
  • Value at Risk (VaR) calculations
  • Market risk modelling
  • Credit Risks
  • Measuring Credit risks
  • Global Market Risks
  • Money Market Risks
  • OTC Risks
  • Exchange risks
 14 Hours

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