The basics of financial markets

Actors, products, cash and derivatives

Course objectives

  • Learn why financial markets are crucial in a modern economy

  • Understand banks' use of those markets

  • Master the differences between cash and derivatives transactions

  • Handle with OTC and Exchange markets differences

  • Understand actors and their functions

  • First approach to market risk management

The functions of financial markets

  • Allowing liquidity flows between different actors
  • Who are the lenders?
  • Who are the borrowers?

Case Study: First approach of Bank ALM management. What happened to their banks balance sheets during 2007 - 2009 liquidity crisis?

  • Allowing financial risk management : Basics for derivatives
    • What kind of risks?
    • First approach to derivatives management
  • The regulators
    • Central banks
    • Local financial authorities
    • International regulation: Basel ratios
  • Global markets organisation
    • OTC markets
    • Exchange traded markets

Case Study: Details of a future markets - how to take advantage of leverage?

  • Global presentation of financial markets :
    • Foreign Exchange markets
    • Interest rate markets
    • Equities markets
    • Credit markets
    • Commodities

Trading rooms

  • Front Office: Sales, traders, structurers, brokers, fund managers, etc…
  • Back Office
  • Middle Office
  • Research - Macroeconomic analysts - Charts analysts
  • Global IT
  • Inspection, audit, compliance

The products

  • Cash products
    • Money markets and Fixed Income markets
    • Foreign Exchange markets
    • Credit markets (approach of “securitisation”)
    • Equities markets
  • Cash forward derivatives
    • Futures
    • Swaps (IRS, FX swap, CDS, Equity swaps)

Case Study: How were CDS involved in the crisis?

  • Conditional derivatives
    • Calls - Puts - Warrants
    • Vanillas - Exotics
    • Buyers and sellers: two different pay-off approaches
    • Basics of pricing
  • Introduction of structured products
    • Structured products: Cash and derivatives mixed

Case Study: How to play equities with a guarantee of capital?

Alain Bouijoux

Alain Bouijoux

Head of sales in London and Paris on a desk for foreign exchange and interest rate derivatives, Alain has evolved for over 10 years in the markets. He faced the needs of his clients as well as the requirements of traders and management obligations of back and middle offices. Today he puts that experience at your disposal to answer all your questions about markets and their actors.

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