Training Courses

Introduction to OTC Derivatives

Category: Derivatives

Course level: Introductory

In house

This workshop aims to provide a Broad-based introduction to OTC derivative contracts and their uses in client portfolios.

No prior knowledge is assumed and all terms will be fully explained.

Objectives

By the end of the workshop, delegates will have a more complete understanding of:

  • the main types of OTC contracts (forwards and swaps, including CDSs)
  • trading contracts (opening and closing positions)
  • how trades move through the administration process
  • marking to market and the settlement process
  • common strategies using forwards and swaps
  • accounting for forwards and swaps in client funds

Length

3 hours

Course Content

Types of derivative contracts and exchange-traded futures

Quick overview of differences between exchange-traded and OTC derivatives (simple matrix)

Forwards

Brief description of forwards
Inherent risks
Counterparty risk, liquidity, lack of regulation
Pricing forwards
Worked example: Calculating the value of a currency forward

Currency forwards

Using currency forwards
Worked example: Hedging a portfolio using currency forwards

Interest rate swaps

Interest rate swaps explained
Accounting for interest rate swaps
Case study: A simple interest rate swap

Currency swaps

Currency swaps explained
Accounting for currency swaps
Worked example: A simple currency swap

Credit default swaps

Credit default swaps (CDSs) explained
Worked example: A simple CDS
Case study: Credit default swaps

Options

Recap on basic puts and calls
Option strategies: bull spread, bear spread, straddle, strangle
Swaptions

This course would be suitable for:

  • HR and training
  • Investment administration and operations
  • Investment professionals
  • IT and software developers
  • Legal & Compliance
  • Sales and marketing

This course would be suitable for these exams:

  • IMC
  • SII Certificate - Derivatives
  • SII Certificate - Financial Derivatives Module
  • SII Certificate - Securities & Financial Derivatives
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