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 Duration 14 hours

Course Outline

Global Capital Markets

  • Defining the 'financial marketplace'
  • The historical evolution of the modern global financial system
  • The influence of financial media
  • The architecture of major capital markets:
    • Exchanges, clearing houses, and regulatory bodies
    • The contemporary surge in global investment activity
    • Variations among different 'Stock Exchanges'
    • The current positioning of stock exchanges within the market landscape
    • Stock exchanges across the US, Europe, the Middle East, and Asia

Regulation of Financial Markets:

  • Capital adequacy requirements
  • Basel I framework
  • Basel II framework
  • Basel III and its operational implications
  • Drivers for new product development

Asset Classes and Their Corresponding Markets

  • Current trading instruments on stock exchanges
  • Equities – both common and preferred shares
  • Bonds – corporate and government issued
  • Bond structures – fixed, floating, and zero-coupon, along with the yield curve
  • Money market instruments
  • Currency markets
  • Investor motivations for buying and triggers for selling
  • Income generation versus capital appreciation
  • Interdependencies among various asset classes
  • Interactions between Exchange-traded and Over-The-Counter (OTC) markets

Short-Term Money Markets

  • Certificates of deposit
  • Treasury bills
  • Commercial paper
  • Trade paper and Bankers' Acceptances
  • Standard market norms and practices
  • Key market participants

Categories of Stock Exchange Investors

  • Individual and institutional investors
  • Fund managers
  • Hedge funds
  • Direct stock exchange participants
  • Investment banks, stockbrokers, hedge funds, and prime brokers
  • Intra-market dynamics – the relationship between buy-side and sell-side entities

The Function of Stock Exchanges

  • Trading venues for various financial products
  • The significance of the OTC market
  • The historical development of stock exchanges
  • Leading stock exchanges in the current global landscape
  • Differences in market architecture across the US, Europe, and Asia
  • Asset classes traded on global stock exchanges
  • Primary and secondary market mechanisms
  • Key exchanges including New York, Euronext, London, Shanghai, and Hong Kong
  • The appeal of listed companies to investors
  • Leveraging stock exchanges to consolidate liquidity and raise capital
  • Strategies for capital raising
  • Company 'floats' – various methodologies

Clearing and Settlement

  • Settlement processes and associated risks
  • Settlement conventions in major markets
  • Handling of equities, bonds, and derivatives
  • Derivatives clearing procedures
  • The role of the Central Counterparty (CCP)
  • CCP services offered to stock exchanges
  • Margin requirements
  • The securities trade settlement workflow
  • Pre-settlement activities
  • Final settlement
  • Potential issues – unmatched trades, delayed settlements, and failed deliveries
  • Stock exchange settlement discipline
  • The 'life cycle of a trade' – tracing the process from execution to settlement
  • The function 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 safe-keeping services
  • Income collection and handling corporate actions
  • Cash management and funding transactions
  • Additional support services
  • Accounting and reporting
  • Stock lending and collateral management
  • Trustee services
  • Valuation reporting

Alternative Investments

  • Defining alternative investments
  • Structured products – risks and return profiles
  • Hedge funds – risk management and control mechanisms
  • Venture Capital – valuation, risk, and control
  • Private Equity and Angel Finance
  • The application of derivatives in asset management
  • OTC versus Exchange-Traded Derivatives (ETD)
  • Types of derivatives utilized in asset management
  • Futures
  • Options
  • Risks and controls related to derivatives, including documentation, valuation, and reporting

Managing Quoted Equity Investments

  • Risks involved in acquiring securities
  • Risks associated with ongoing securities management
  • Risks linked to corporate actions
  • Pricing mechanisms for quoted equity
  • Primary sources of risk
  • Standard controls within equity investment
  • Risks specific to international equity markets

Managing Quoted Fixed Income Investments

  • Risks associated with buying and selling fixed-income securities
  • Utilization of credit ratings and related risk considerations
  • Risks involved in pricing fixed-income securities
  • Risk and control measures in corporate fixed-income processing
  • Risks associated with government securities
  • Sovereign risk ratings
  • Valuation of government securities
  • Risk and control measures in sovereign bond processing

Market and Credit Risks in Global Investment

  • Identification of market risks
  • Value at Risk (VaR) calculations
  • Market risk modeling techniques
  • Identification of credit risks
  • Metrics for measuring credit risk
  • Global market risk factors
  • Money market risks
  • OTC market risks
  • Exchange-based risks

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