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 Duration 14 hours

Course Outline

Global Capital Markets

  • Defining the 'financial marketplace'
  • The historical evolution of today's global financial systems
  • The influence of financial media
  • The architecture of major capital markets:
    • Exchanges, clearing houses, and regulatory bodies
    • The contemporary rise in global investment flows
    • Variations in stock exchange structures
    • The positioning of stock exchanges in current markets
    • Comparison of US, European, Middle Eastern, and Asian exchanges

Regulation of Financial Markets

  • Capital adequacy requirements
  • Basel I framework
  • Basel II framework
  • Basel III and its broader implications
  • Regulatory drivers for new product development

Asset Classes and Their Markets

  • Current trading instruments on stock exchanges
  • Equities: common and preferred stocks
  • Bonds: corporate and government issues
  • Bond types: fixed-rate, floating-rate, zero-coupon, and the yield curve
  • Money market instruments
  • Currency markets
  • Investor motives for buying and selling
  • Income generation versus capital appreciation
  • Interdependencies between different asset classes
  • The interplay between exchange-traded and Over-The-Counter (OTC) markets

Short-Term Money Market

  • Certificates of deposit
  • Treasury bills
  • Commercial paper
  • Trade paper and bank acceptances
  • Standard market norms and practices
  • Key market participants

Types of Stock Exchange Participants

  • Individual and institutional investors
  • Fund managers
  • Hedge funds
  • Exchange members
  • Investment banks, stockbrokers, hedge funds, and prime brokers
  • Market dynamics: the relationship between buy and sell sides

The Function of the Stock Exchange

  • Trading venues for various products
  • The significance of the OTC market
  • Historical development of stock exchanges
  • Major exchanges in the modern global landscape
  • Differing architectures of US, European, and Asian markets
  • Asset classes traded across global exchanges
  • Distinguishing primary and secondary markets
  • Key hubs: New York, Euronext, London, Shanghai, and Hong Kong
  • The appeal of listed companies to investors
  • Leveraging exchanges to consolidate liquidity and raise capital
  • Strategies for capital raising
  • Corporate 'floats': various methods and approaches

Clearing and Settlement

  • Settlement mechanics and associated risks
  • Settlement conventions in major markets
  • Settlement of equities, bonds, and derivatives
  • Processes for clearing derivatives
  • The Central Counterparty (CCP) role
  • CCP services offered to stock exchanges
  • Margin requirements
  • The security trade settlement workflow
  • Pre-settlement procedures
  • Final settlement
  • Common issues: unmatched trades, settlement delays, and failed deliveries
  • Enforcement of settlement discipline on exchanges
  • The trade lifecycle: linking 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 Services

  • The role of custodians in stock markets
  • Safekeeping and settlement
  • Income collection and processing corporate actions
  • Cash management and funding transactions
  • Supplementary services
  • Accounting functions
  • Stock lending and collateral management
  • Trustee services
  • Valuation reporting

Alternative Investments

  • Defining alternative investments
  • Structured products: risk and return profiles
  • Hedge funds: risk management and controls
  • Venture capital: valuation, risk, and control mechanisms
  • Private equity and angel financing
  • Application of derivatives in asset management
  • OTC versus Exchange-Traded Derivatives (ETD)
  • Types of derivatives used in asset management
  • Futures
  • Options
  • Risk controls for derivatives, including documentation, valuation, and reporting

Management of Quoted Equity Investments

  • Risks involved in acquiring securities
  • Risks involved in managing securities
  • Risks associated with corporate actions
  • Pricing mechanisms for quoted equities
  • Primary risk sources
  • General control frameworks for equity investments
  • 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 considerations
  • Risks 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 Investing

  • Identification of market risks
  • Value at Risk (VAR) calculations
  • Modeling market risks
  • Identification of credit risks
  • Measuring credit risk exposure
  • Global market risk dynamics
  • Money market risks
  • OTC market risks
  • Exchange-based risks

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