This one-day class examines these intricate and complex products; from futures and listed equity options to over-the-counter products such as interest rate and credit default swaps. The session begins with a review of the instruments from each product groups, detailing contract characteristics and their implications for market participants. We then proceed to explore the marketplace for each derivative product to understand how trading is conducted in the various over-the-counter and listed markets. The presentation continues with a review of the associated processes of clearing, margin, settlement and transaction servicing. At the conclusion each participant will gain an appreciation of the difference and similarities of these products as well as the trade lifecycle activities. 

Throughout the class, participants will be engaged in discussions and activities that will leverage their initial and in-class knowledge of the concepts and processes. We will review current initiatives to provide additional industry infrastructure support to the recording and servicing functions of over-the-counter products as well as regulatory efforts.

Introduction

   -Types of Derivatives
   -Characteristics of Derivatives Contracts and Markets
   -Over-the-Counter (OTC) Versus Listed (Exchange Traded) -Markets
   -Market Participants and How Their Trading Impacts Markets

Derivative Instruments Terms and Characteristics

   -Types of Derivative Contracts
        -Futures
        -Forward Contracts
        -Equity Options
        -Futures Options
        -Swaps (Other than CDS)
        -Credit Default Swaps (CDS)
   -Contract Features and Position Considerations
        -Terms and definitions
        -Contract sellers (short) position obligations
        -Contract buyers (long) position rights/obligations
        -Cash flows (if appropriate) at contract creation
        -Cash flows and credit risk over life of contract
        -Closing positions prior to delivery/expiration/maturity
        -Settlement at delivery/exercise/incidence of credit event

OTC and Exchange Trading of Derivatives

   -Listed Trading
        -Standardized contracts
        -Futures/options trading floors (auction/open outcry markets)
        -Electronic exchanges/trading
        -Simultaneous open outcry and electronic trading
        -Order origination and execution
        -Role of clearinghouses in clearance and settlement
   -Over-the-Counter Trading of Swaps, Forward and Option Contracts
        -Dealer markets
        -Non-standardized (negotiated/tailored) contracts
        -Trade origination and execution
        -ISDA contract
   -Post-trade Activities
        -Customer confirmation
        -Street-side comparison
        -Margin

Regulation of Derivative Markets

   -Regulatory Authorities
   -Industry Self Regulation
   -Significant Regulations

Trends/Perspectives

   -Current
        -DerivServ
        -ISDA
        -OTC derivatives
   -Future
        -Best practices
        -Warehouse
        -Regulations