Equities and Related Derivatives

Introduction to Sales, Trading and Research

This session will explain the basic workings of the trading floor, the flow of business from client to sales and to trader. Examples will be used showing the various types of order management - worked orders, market-making and spread trades. The role of research and trade support in supporting client business will also be covered.

 

Economics

Delegates are introduced to key macro-economic concepts and their relevance to banks and clients. At an advanced level we introduce yield curves, FX markets, monetary policy, fiscal policy and some key economic numbers that influence markets. Key numbers affecting the financial markets are reviewed.

Financial Math Bootcamp

Delegates will understand the principles of present value, future value, annuities and perpetuities. Timing issues of cash generation and discounting mid-year and year-end cash flows is also covered.

 

Statistics and Probability

This session introduces delegates to the topic of statistics as used in financial markets. Beginning with central tendency, we move through single and bi-variate analysis and introduce probability distributions and confidence intervals. All learning points are covered in an Excel based practical exercise.

 

Capital Markets Fundamentals for Markets

This session introduces the world of capital markets, illustrating how capital flows between investors and issuers. We will introduce and explain the functions of capital markets and the role of key institutional investors. This session will conclude with a brief discussion on what is practically, as opposed to theoretically, available in the current climate.

 

Derivatives: Forwards, Futures and Options

This session will introduce the key derivative products relevant to most major securities markets. Their alternative uses as hedging tools and leveraged speculative instruments will be explored. Option payoffs will be introduced, and the key Greeks will be discussed, with particular emphasis on Vega (Volatility).

 

Fundamentals of Futures

This session covers the key features of futures; namely pricing and the margin process. Delegates will also consider the benefits of futures versus over the counter forwards.

 

Fundamentals of Options

This session starts by introducing delegates to the nature and features of options. Delegates are encouraged to consider options from the point of view of a deferred decision to invest. Pay-off profiles form a large part of the course, before the key issues of volatility are addressed.

 

Hedging Using Options

This session starts with a review of option pay-off profiles at maturity. Delegates are then given some examples of common hedging strategies. Delegates will review a case study and analyze a number of options strategies to generate a hedge solution for a customer. This case study is a very powerful learning opportunity as delegates are working with little tutor input using a Excel spreadsheet which shows them the price, pay-off profile at maturity and risk data for a number of options.

 

Option Strategies

This session covers traditional option strategies which are found in both the exchange traded and over the counter markets. Delegates will develop their knowledge of the pay-off profile at maturity of vanilla options.

 

Option Pricing Models

This is a mathematical session where the theory and practice of option pricing is studied. The early part of the session is focused on understanding key information which is needed when asking for an option price from a pricing model. Delegates will then use their key statistical skills to perform a number of calculations.

 

Option Risk Management

Knowledge of option risk management will allow the delegates to have a clear idea as to how and why an option price will move.  This session will develop key skills for those who use options within risk portfolios or advising customers when options are an appropriate hedging or risk taking product.

 

Features of Exotic Options

Exotic options are found within many hedging and investment products. Delegates will build knowledge by first considering the possibility of changing the risk nature of vanilla options. The course then moves on to study some of the many exotic option variations.

 

Hedging Ideas Using eExotic Options

In this session delegates are asked to consider a number of common customer hedging and investment solutions. The key is to be able to identify the vanilla and exotic options which have been used to construct the risk profile.

 

Fundamentals of Swaptions

The swaption market is a favourite of some managers in the hedge fund community. The language and mechanics of swaptions is the focus of this course, along with considering how they are used to hedge interest rate risk.

 

Structured Product Markets

The aim of this session is to provide delegates with a sound overview of the nature and purpose of structured products. The spectrum of structured products is covered along with the mechanics of constructing these products. A key tool during the session is the analysis of term sheets. By the end of the session delegates will be able to identify the type of structured product that would meet a specific client need.

 

Technical Analysis: Part 1

In this session delegates learn about the theory and practice of trading using technical analysis. The course presents the contrasting methods of stock valuation using fundamental analysis, and using technical analysis for timing of buys and sells. Delegates see how the practices differ, and how they are also complementary. The course follow with the foundation of Dow Theory, whose 3 tenets remain the basis of modern technical analysis. Delegates learn various types of charts, and why they display information in different ways. Illustrations are presented for defining and identifying Trends, Support and Resistance, and Momentum on charts. The audience for this course are people who would like to see practical applications of technical analysis as a way to understand market movements.

 

Technical Analysis: Part 2

In this session delegates learn about common price patterns. The patterns are illustrated as Bullish and Bearish formations. Delegates learn to identify short-term candlestick patterns, and also longer term trend-continuation and trend-reversal patterns. The course then presents the idea of Price Targets and Retracement Levels, using both the pattern measurement techniques, and also Fibonacci Ratio measurement techniques. These price targets and retracements are compared to those based on Dow Theory. The session presents conclusions to help guide the delegate in understanding that Technical Analysis is probability based. It is one tool among several for trading, and should not be used without a sound money and risk management program.

 

Trading Simulation

This day will be spent giving delegates a flavour of the dynamics of trading varying markets, under different conditions, both from the perspective of market-maker, and buy-side client.

 

The day will be split into four sixty-minute trading sessions with a debrief afterwards. Two equity trading sessions will run, with the class split in two. In the first session group A will act as market-makers, and group B as clients requesting quotes, and trading on prices from the market-makers. The roles will switch for the second session allowing delegates to learn first-hand how different the roles are. After each session delegates’ feedback will be given and the challenges experienced by delegates will be discussed.

 

In the afternoon session the procedure will be repeated using FX markets. Again delegates will have the opportunity to act alternately as market-maker and buy-side client.

 

Each session will feature realistic market price action, with bids and offers visible on-screen. Delegates will choose how aggressively to express their views and will see each other’s bids and offers on screen, as well as those generated by the system. Price action will be largely explained by realistic new stories appearing on screen throughout the trading day. Each session involved a virtual day of trading and news, compressed into one hour.

 

Life Cycle of a Trade

This is a case study based session which follows the life cycle of a trade.  The key features of the transaction are all considered; execution, confirmation, clearing and settlement, along with information flow and the role of a custodian. The control functions within the organization are considered as part of the case study.

 

Portfolio Construction Theory

This session will look at the theoretical underpinnings of asset allocation and diversification. The session is very practical in nature with delegates building the concepts covered in Excel models under trainer supervision. At the end of the training the delegates will have a sound basis in the mathematical concepts which form the basis of fund management and client money management.

 

Portfolio Construction Practice

Using models built in Excel, we learn how to calculate the risk and return for a portfolio (as opposed to two individual asset classes). We will begin with a simple two asset portfolio and show how to derive an optimal allocation. Delegates will then work on extending what they have learned to a multi-asset portfolio and building an efficient frontier for a larger range of assets. We will see how diversification brings about powerful benefits in terms of increased returns or decreased risk, compared to that available in single asset classes. We will use the MPT optimization technique to derive an optimal portfolio for a multi-asset portfolio and introduce the use of various conditions such as maximum exposure to individual asset classes.

 

Portfolio Implementation and Performance Measurement

Having learned how to construct an optimal portfolio we will spend this session studying the practical aspects an investment or portfolio manager will need to consider when implementing the desired allocation and evaluating performance.

 

Investment Management Fundamentals

During this session delegates will learn about the rationale for investing, how the investment process works, in particular understanding the different type of objectives different investors might have.  Finally, there will be a review of different investment styles and the attractions of each.

 

Macroeconomics and Financial Markets

This session starts with a review of the economy, macroeconomic statistics and the key role of policy-makers, before moving into a practical examination of macroeconomic data releases. Throughout the session regional examples are used so that global economic relationships are brought to the fore. Delegates are encouraged to consider the impact of economic data on banking clients and through this how they will be affected at work.

 

The majority of the session is spent studying economic data releases and analyzing their impact. Delegates are given a series of Bloomberg screens which detail security price movements and news stories after the release of key macroeconomic data from each region. The discussion of this information will enable delegates to come away from the session with a solid understanding of macroeconomics and global financial markets.

 

Equity Markets

This session aims to give delegates an understanding of the workings of equity markets, how capital is raised and re-distributed, and how investors use various valuation techniques to inform their investment decision. The varying concerns, trading styles and time horizons of market delegates are introduced.

 

Delta 1: Equity Index Futures

Equity index futures are a key product for fund managers. Delegates will consider how these can be used to generate synthetic equity investment and to hedge a portfolio of equity investments.

 

Delta 1: Equity Swaps

This session looks at the features and applications of equity swaps.

 

Delta 1: ETFs

During this session delegates will learn about ETFs as an alternative Delta 1 equity product, as well as their use in commodities and other markets. Finally the three main Delta 1 products will be compared and contrasted relative to a basket of stocks. The mechanics of trading, varying degrees of leverage and counter-party risk will be explored.

 

Delta 1: Product Summary

During this session delegates will learn about ETFs as an alternative Delta 1 equity product, as well as their use in commodities and other markets. Finally the three main Delta 1 products will be compared and contrasted relative to a basket of stocks. The mechanics of trading, varying degrees of leverage and counter-party risk will be explored.

 

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FICC

Fixed Income Market Fundamentals

Delegates will be introduced to the workings of fixed income markets. At the end of this session delegates will understand the time value of money, yield curves, the price/yield relationship and market quoting conventions.

 

Introduction to Sales, Trading and Research

This session will explain the basic workings of the trading floor, the flow of business from client to sales and to trader. Examples will be used showing the various types of order management - worked orders, market-making and spread trades. The role of research and trade support in helping client businesses will also be covered.

Economics

Delegates are introduced to key macro-economic concepts and their relevance to banks and clients. At an advanced level we introduce yield curves, FX markets, monetary policy, fiscal policy and some key economic numbers that influence markets. Key numbers affecting the financial markets are reviewed.

 

Financial Math Bootcamp

Delegates will understand the principles of present value, future value, annuities and perpetuities. Timing issues of cash generation and discounting mid-year and year-end cash flows is also covered.

 

Statistics and Probability

This session introduces delegates to the topic of statistics as used in financial markets. Beginning with central tendency, we move through single and bi-variate analysis and introduce probability distributions and confidence intervals. All learning points are covered in an Excel based practical exercise.

 

Capital Markets Fundamentals for Markets

This session introduces the world of capital markets illustrating how capital flows between investors and issuers. We will introduce and explain the functioning of capital markets and the role of key institutional investors. This session will conclude with a brief discussion on what is practically, as opposed to theoretically, available in the current climate.

 

Derivatives: Forwards, Futures and Options

This session will introduce the key derivative products relevant to most major securities markets. Their alternative uses as hedging tools and leveraged speculative instruments will be explored. Option payoffs will be introduced, and the key Greeks will be discussed, with particular emphasis on Vega (Volatility).

 

Fundamentals of Futures

This session covers the key features of futures; namely pricing and the margin process. Delegates will also consider the benefits of futures versus over the counter forwards.

 

Fundamentals of Options

This session starts by introducing delegates to the nature and features of options. Delegates are encouraged to consider options from the point of view of a deferred decision to invest. Pay-off profiles form a large part of the course, before the key issues of volatility are addressed.

 

Hedging Using Options

This session starts with a review of option pay-off profiles at maturity. Delegates are then given some examples of common hedging strategies. Delegates will review a case study and analyze a number of options strategies to generate a hedge solution for a customer. This case study is a very powerful learning opportunity as delegates are working with little tutor input using a spreadsheet which shows them the price, pay-off profile at maturity and risk data for a number of options.

 

Option Strategies

This session covers the traditional option strategies which are found in both the exchange traded and over the counter markets. Delegates will develop their knowledge of the pay-off profile at maturity of vanilla options.

 

Option Pricing Models

This is a mathematical session where the theory and practice of option pricing is studied. The early part of the session is focused on understanding key information which is needed when asking for an option price from a pricing model. Delegates will then use their key statistical skills to perform a number of calculations.

 

Option Risk Management

Knowledge of option risk management will allow the delegates to have a clear idea as to how and why an option price will move.  This session will develop key skills for those who use options within risk portfolios or advising customers when options are an appropriate hedging or risk taking product.

 

Features of Exotic Options

Exotic options are found within many hedging and investment products. Delegates will build knowledge by first considering the possibility of changing the risk nature of vanilla options. The course then moves on to study some of the many exotic option variations.

 

Hedging Ideas Using Exotic Options

In this session delegates are asked to consider a number of common customer hedging and investment solutions. The key is to be able to identify the vanilla and exotic options which have been used to construct the risk profile.

 

Fundamentals of Swaptions

The swaption market is a favourite of some managers in the hedge fund community. The language and mechanics of swaptions is the focus of this course, along with considering how they are used to hedge interest rate risk.

 

Structured Product Markets

The aim of this session is to provide delegates with a sound overview of the nature and purpose of structured products. The spectrum of structured products is covered along with the mechanics of constructing these products. A key tool during the session is the analysis of term sheets. By the end of the session delegates will be able to identify the type of structured product that would meet a specific client need.

 

Technical Analysis: Part 1

In this session delegates learn about the theory and practice of trading using technical analysis. The course presents the contrasting methods of stock valuation using fundamental analysis, and using technical analysis for timing of buys and sells. Delegates see how the practices differ, and how they are also complementary. The course follow with the foundation of Dow Theory, whose 3 tenets remain the basis of modern technical analysis. Delegates learn various types of charts, and why they display information in different ways. Illustrations are presented for defining and identifying Trends, Support and Resistance, and Momentum on charts. The audience for this course are people who would like to see practical applications of technical analysis as a way to understand market movements.

 

Technical Analysis: Part 2

In this session delegates learn about common price patterns. The patterns are illustrated as Bullish and Bearish formations. Delegates learn to identify short-term candlestick patterns, and also longer term trend-continuation and trend-reversal patterns. The course then presents the idea of Price Targets and Retracement Levels, using both the pattern measurement techniques, and also Fibonacci Ratio measurement techniques. These price targets and retracements are compared to those based on Dow Theory. The session presents conclusions to help guide the delegate in understanding that Technical Analysis is probability based. It is one tool among several for trading, and should not be used without a sound money and risk management program.

 

Trading Simulation

This day will be spent giving delegates a flavour of the dynamics of trading varying markets, under different conditions, both from the perspective of market-maker and buy-side client. The day will be split into four sixty-minute trading sessions with a debrief afterwards. Two equity trading sessions will run, with the class split in two. In the first session group A will act as market-makers, group B as clients requesting quotes and trading on prices from the market-makers. The roles will switch for the second session allowing delegates to learn first-hand how different the roles are. After each session they will be able to feedback and the challenges experienced by delegates will be discussed.

 

In the afternoon session the procedure will be repeated using FX markets. Again delegates will have the opportunity to act alternately as market-maker and buy-side client. Each session will feature realistic market price action, with bids and offers visible on-screen. Delegates will choose how aggressively to express their views and will see each other’s bids and offers on screen, as well as those generated by the system. Price action will be largely explained by realistic new stories appearing on screen throughout the trading day. Each session involved a virtual day of trading and news, compressed into one hour.

 

Life Cycle of a Trade

This is a case study based session which follows the life cycle of a trade.  The key features of the transaction are all considered; execution, confirmation, clearing and settlement, along with information flow and the role of a custodian. The control functions within the organization are considered as part of the case study.

 

Portfolio Construction Theory

This session will look at the theoretical underpinnings of asset allocation and diversification. The session is very practical in nature with delegates building the concepts covered in Excel models under trainer supervision. At the end of the training the delegates will have a sound basis in the mathematical concepts which form the basis of fund management and client money management.

 

Portfolio Construction Practice

Using models built in Excel, we learn how to calculate the risk and return for a portfolio (as opposed to two individual asset classes). We will begin with a simple two asset portfolio and show how to derive an optimal allocation. Delegates will then work on extending what they have learned to a multi-asset portfolio and building an efficient frontier for a larger range of assets. We will see how diversification brings about powerful benefits in terms of increased returns or decreased risk, compared to that available in single asset classes. We will use the MPT optimization technique to derive an optimal portfolio for a multi-asset portfolio and introduce the use of various conditions such as maximum exposure to individual asset classes.

 

Portfolio Implementation and Performance Measurement

Having learned how to construct an optimal portfolio we will spend this session studying the practical aspects an investment or portfolio manager will need to consider when implementing the desired allocation and evaluating performance.

 

Investment Management Fundamentals

During this session delegates will learn about the rationale for investing, how the investment process works, in particular understanding the different type of objectives different investors might have.  Finally, there will be a review of different investment styles and the attractions of each.

 

Macroeconomics and Financial Markets

This session starts with a review of the economy, macroeconomic statistics and the key role of policy-makers, before moving into a practical examination of macroeconomic data releases. Throughout the session regional examples are used so that global economic relationships are brought to the fore. Delegates are encouraged to consider the impact of economic data on banking clients and through this how they will be affected at work.

 

The majority of the session is spent studying economic data releases and analyzing their impact. Delegates are given a series of Bloomberg screens which detail security price movements and news stories after the release of key macroeconomic data from each region. The discussion of this information will enable delegates to come away from the session with a solid understanding of macroeconomics and global financial markets.

 

Money Market Instruments

The features of the key money market products along with pricing considerations will be studied.

 

Repurchase Agreements

Repos are fundamental funding and liquidity products within financial markets. Delegates will consider the practical aspects of repo and reverse-repo transactions and how these may be used to increase portfolio returns.

 

Technical Analysis: Charting Part 1

The main goal of this session is to explain the different types of charts and how to interpret them. It will start explaining how market’s participants moved away from the random walk theory towards the modern technical analysis; it will compare TA with the behavioural finance and fundamental theory. It will conclude with the explanation and interpretation of all chart types. This session is addressed to those people who would like to gain the basis of charting analysis by focusing on simple and effective principles.

 

Technical Analysis: Charting Part 2

The main goal of this session is to identify trends, stop losses and targets within a bar or candlestick chart. Price action and how this develops into key market’s level, trends and consolidation phases will be analyzed. Fibonacci theory will be applied to charts to derive price projections and retracements. This session is for those people who would like to take chart analysis a step further and learn how to recognize supports and resistances needed to set up a trading strategy.

 

Technical Analysis: Charting Part 3

The main goal of this course is to complete chart analysis by explaining how to recognize patterns.  All main continuation and reversal patterns will be analysed and it will be explained how to find supports and resistances to set up a strategy.

 

Technical Analysis: Quantitative Tools Part 1

The main goal of this session is to explain the quantitative tools used by modern technical analysis. The first group of indicators are used to spot and determine markets that are in a trading in a trend; the second group, instead, are used when markets are trading laterally or consolidating.

 

Technical Analysis: Quantitative Tools Part 2

The main goal of this session is to put together charting and quantitative tools as well as analyzing advanced aspects of trading like cycles, money management. The focus will be on the Elliott wave and harmonic theory.

 

Bond Markets

The basic structure of a bond will be clarified, along with the variations which are found within markets. Delegates will focus on the major bond issuers and the variations found within markets. Exercises will illustrate the price-yield relationship intuitively. Yield to maturity and yield curves will be discussed.

 

Language of Yield Curves

Yield curves are a key metric when analyzing fixed income markets both from a risk management and investment perspective.

 

Bond Cash Flows and Valuation

During this session we discuss the detail of calculation of coupons and accrued interest, and we build a bond pricing model in Excel, exploring how bond valuation is performed between coupon dates. While building the model, delegates will develop their understanding of cash flow sizes and dates, accrued interest, discount factors and yield.

 

Bond Forward Pricing

This mathematical session covers an important analytical tool for fixed income practitioners. Forward pricing is found within derivatives and advanced risk management techniques.

 

Bond Hedging and Trading Strategies

This session starts with a review of bond market risk management. Delegates will consider the strategies used by fund managers in the bond markets to hedge and take risk. For each hedging and trading strategy the focus will be risk profile along with risk metrics generated.

 

Physical Commodity Markets

This session looks at the physical commodity markets and their unique features. Delegates will consider the relationship between commodities and financial markets.

 

Bond Futures

Bond futures are an important hedging tool in fixed income markets. During this session delegates will follow cash and carry pricing principles to model the fair futures price. Once this has been mastered the session moves on to computing hedge ratios and using bond futures to hedge portfolios of bonds.

 

Short-Term Interest Rate Futures

This key financial market product is an important building block when learning about fixed income markets. During this session delegates will consider how STIR futures can be used to hedge funding risk along with the information they provide about the market’s opinion about official interest rates.

 

Fundamentals of Interest Rate Swaps

Delegates take a deep dive into the world of interest rate swaps. The initial focus is on hedging interest rate risk and the mechanics and language of this financial market product. Delegates will then study how interest rate swaps are used to manage the income from fixed income portfolios. A case study affords delegates with time to reflect on their knowledge in this area; eight customers are considered and individual solutions need to be recommended.

 

Interest Rate Swap Variations

This session covers the many variations to vanilla interest swaps which are found in financial markets. A quick review of the features of interest rate swaps is followed by detailed study of each variation and how each can be used to manage risk.

 

Practical Interest Rate Swap Pricing and Risk Management

This session is highly interactive and somewhat technical in nature. Delegates will build an interest rate swap pricing model in an Excel spreadsheet whilst at the same time studying the mathematical relationships between par swap rates, discount factors and forward rates. When the model is completed a series of existing and new interest rate swaps will be priced so that delegates can maximize their understanding of the mechanics of this important financial market product.

 

Credit Market and Credit Derivatives Overview

This session will introduce delegates to corporate bonds, how they are rated and the relevance of credit ratings. Investment-grade and high-yield bonds, asset-backed securities and CDS/CDO will be introduced and context given to the current economic environment.

 

Credit Market Overview

In this session we introduce the theme of credit risk measurement and credit risk management. Did the credit derivatives market stop functioning through the credit crisis and do the credit markets provide an efficient way of transferring credit risk?

 

Single Name Credit Default Swaps (CDS)

In this session we introduce credit risk and credit risk transfer in over-the-counter derivative transactions. Single name CDS products are defined and we demonstrate a series of simple applications for this popular and liquid product.

 

Pricing Single Name Credit Derivatives

In this session we analyze how the fundamental and market factors can be used to value single name CDS contracts. This section is not intended to be a deep formulaic exercise rather a practical framework for the CDS user.

 

Portfolio Credit Derivatives

In this session we look at popular credit index products and introduce the theme of credit portfolio risk management (discussed in more depth in the next session).

 

Fundamentals of Caps and Floors

Caps and floors are traditional hedging tools for corporates. This course takes delegates through the mechanics of constructing these products, with a focus on the risk profiles that are generated.

 

Interest Rate Derivative Hedging and Trading Strategies

This session brings together the various interest rate derivative products and focuses on how they can be used to take or hedge risk: either individually or in combination.  Delegates will review a number of common strategies from the markets.

 

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