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 Duration 14 hours

Course Outline

Global Capital Markets

  • Definition of a 'financial market place'
  • Historical evolution of the modern global financial market
  • The influence of financial media
  • Structure of major capital markets:
    • Exchanges, Clearing houses, and Regulators
    • The contemporary surge in global investment
    • Varieties of 'Stock Exchanges'
    • The position of Stock Exchanges in current 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 consequences
  • Sources for New Product Development

Diverse Asset Classes and Their Markets

  • Current instruments traded on Stock Exchanges
  • Equities: Common and Preferred
  • Bonds: Corporate and Government
  • Bonds: Fixed, Floating, and Zero-coupon, including the Yield Curve
  • Money Market instruments
  • Currency markets
  • Investor motivations for buying and selling
  • Income vs. Capital Gain
  • Interrelationships among various asset classes
  • Interaction between Exchange-traded and Over-The-Counter (OTC) markets

Short-Term Money Markets

  • Certificates of deposit
  • Treasury Bills (T-Bills)
  • Commercial paper
  • Trade paper and Bank Acceptances (BAs)
  • Market norms and practices
  • Key market participants

Types of Stock Exchange Investors

  • Individual and institutional Investors
  • Fund managers
  • Hedge funds
  • Stock Exchange participants
  • Investment banks, Stockbrokers, Hedge Funds, and Prime Brokers
  • Intra-market dynamics: the buy and sell sides of the industry

The Function of Stock Exchanges

  • Trading venues for financial products
  • The significance of the OTC market
  • Historical development of Stock Exchanges
  • Major Stock Exchanges in contemporary markets
  • Architectural differences in US, European, and Asian Markets
  • Asset classes traded on global Stock Exchanges
  • Primary and Secondary markets
  • Key hubs: New York, Euronext, London, Shanghai, and Hong Kong
  • The appeal of 'listed' companies to investors
  • Utilizing Stock Exchanges for liquidity pooling and capital raising
  • Capital raising methods
  • 'Floating' a company: various methodologies

Clearing and Settlement

  • Settlement processes and settlement risk
  • Settlement Conventions in major markets
  • Handling of Equities, Bonds, and derivatives
  • Derivatives Clearing process
  • The Central Counterparty (CCP)
  • CCP services offered to Stock Exchanges
  • Margin requirements
  • Security trade settlement workflow
  • Pre-settlement procedures
  • Final Settlement
  • Common issues: unmatched trades, delayed settlement, and bad delivery
  • Stock Exchange Settlement Discipline
  • The 'life cycle of a trade': linking trade execution to settlement
  • Roles of International Central Securities Depositories (ICSDs) and Central Securities Depositories (CSDs) – e.g., LCH.Clearnet, Euroclear, Crest, Clearstream International, and the DTC

Custody Services

  • The role of Custodians in Stock markets
  • Settlement and safe-keeping of assets
  • Income collection and processing Corporate Actions
  • Cash management and funding transactions
  • Additional custodial services
  • Accounting functions
  • Stock Lending and collateral management
  • Trustee services
  • Valuation reporting

Alternative Investments

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

Management of Quoted Equity Investments

  • Risks in acquiring securities
  • Risks in managing securities
  • Risks linked to corporate actions
  • Pricing mechanisms for quoted equity investments
  • Major risk sources
  • General controls within equity investment
  • Risks specific to international equity markets

Management of Quoted Fixed Income Investments

  • Risks in acquiring and disposing of fixed income securities
  • Use of credit ratings and associated risk factors
  • Pricing risks for fixed income securities
  • Risk and control within corporate fixed income processing
  • Risks associated with Government Securities
  • Sovereign risk ratings
  • Valuation of government securities
  • Risk and control within sovereign bond processing

Market and Credit Risks in Global Markets

  • Identification of Market risks
  • Value at Risk (VaR) calculations
  • Market risk modelling techniques
  • Assessment of Credit Risks
  • Methods for measuring Credit risks
  • Global Market Risks
  • Money Market Risks
  • OTC Risks
  • Exchange-specific risks

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