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Course Outline

Global Capital Markets

  • The definition of a ‘financial market place’
  • The historical evolution of the contemporary global financial system
  • The influence of financial media
  • The architecture of major capital markets:
    • Roles of exchanges, clearing houses, and regulatory bodies
    • The recent surge in global investment activity
    • Various forms of ‘Stock Exchanges’
    • The position of Stock Exchanges in the current market landscape
    • 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 strategic implications
  • Implications for New Product Development

Asset Classes and Their Corresponding Markets

  • Current trading instruments on Stock Exchanges
  • Equities – Common and Preferred shares
  • Bonds – Corporate and Government issues
  • Bonds – Fixed, floating, and zero-coupon rates; understanding the Yield Curve
  • Money Market instruments
  • Currency markets
  • Investor motivations for buying and selling
  • Distinguishing between Income and Capital Gains
  • Interconnections among different asset classes
  • The relationship between Exchange-traded and Over-The-Counter (OTC) markets

Short-Term Money Market

  • Certificates of deposit
  • Treasury Bills (T-Bills)
  • Commercial paper
  • Trade paper & Bankers’ Acceptances (BAs)
  • Standard market norms and practices
  • Key market participants

Types of Stock Exchange Investors

  • General investors
  • Fund managers
  • Hedge funds
  • Participants in the Stock Exchange
  • Investment banks, Stockbrokers, Hedge Funds, and Prime Brokers
  • Intra-market dynamics – the buy and sell sides of the industry

The Function of the Stock Exchange

  • Trading venues for financial products
  • The significance of the OTC market
  • The historical development of Stock Exchanges
  • Leading Stock Exchanges in the current market
  • Architectural differences in US, European, and Asian markets
  • Asset classes traded on exchanges worldwide
  • Major 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
  • Methods of Capital Raising
  • ‘Floating’ a company – various approaches

Clearing & Settlement

  • Settlement processes and associated risks
  • Differing Settlement Conventions in major markets
  • Handling of Equities, Bonds, and Derivatives
  • The Derivatives Clearing process
  • The Central Counterparty (CCP)
  • Services provided by CCPs to Stock Exchanges
  • Margin requirements
  • The security trade settlement workflow
  • Pre-settlement procedures
  • Final Settlement
  • Potential issues – unmatched trades, settlement delays, and delivery failures
  • Settlement Discipline within Stock Exchanges
  • The ‘life cycle of a trade’– integrating the process from execution to settlement
  • The role of International Central Securities Depositories (ICSDs) and Central Securities Depositories (CSDs) – including LCH.Clearnet, Euroclear, Crest, Clearstream International, and the DTC

Custody

  • The role of Custodians in Stock markets
  • Settlement and safekeeping services
  • Income collection and Corporate Actions
  • Cash management and funding transactions
  • Additional value-added services
  • Accounting processes
  • Stock Lending and collateral management
  • Trustee services
  • Valuation reporting

Alternative Investments

  • Definition of Alternative Investments
  • Structured products - Risk and return profiles
  • Hedge funds - Risk management and control
  • Venture Capital: Valuation challenges, risk, and control
  • Private Equity & Angel Finance
  • Application of derivatives in Asset Management
  • OTC vs. Exchange-Traded Derivatives (ETD)
  • Types of Derivatives used in Asset Management
  • Futures
  • Options
  • Risk and control mechanisms for derivatives, including documentation, valuation, and reporting

Management of Quoted Equity Investments

  • Risks involved in acquiring securities
  • Risks associated with managing securities
  • Risk exposure from corporate actions
  • Pricing methodologies for quoted equity investments
  • Primary sources of risk
  • General controls within equity investment management
  • Risks specific to international equity markets

Management of Quoted Fixed Income Investments

  • Risks in acquiring and disposing of fixed income securities
  • The use of credit ratings and related risk considerations
  • Risks associated with pricing fixed income securities
  • Risk and control measures in corporate fixed income processing
  • Risks linked to Government Securities
  • Sovereign risk ratings
  • Valuation of government securities
  • Risk and control measures in sovereign bond processing

Market and Credit Risks in Global Market Investing

  • Identification of Market risks
  • Value at Risk (VaR) calculations
  • Market risk modelling techniques
  • Identification of Credit Risks
  • Methods for Measuring Credit risks
  • Global Market Risks
  • Money Market Risks
  • OTC Risks
  • Exchange-related risks
 14 Hours

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