Firms

Producers, Integrated firms, Physical Traders, End-users, Marketers, Financial Institutions, Investment funds, Utilities, Co-operatives
Functions

Market and credit risk managers
Chief Risk Officers
CFO, Treasurer, Analysts
Back office and operations
Audit and Accounting teams involved with derivatives activities
IT departments servicing risk groups
Management teams: Metals, Agricultural, and Energy Markets

Industries in Metal business:

Base Metals (Aluminum, Copper, Zinc), Precious Metals (Gold, Silver), and Ferrous Metals (Iron ore)
Agriculture: Wheat, Corn, Biofuels, Cocoa, Coffee, Soybeans, Palm Oil, Sugar, Weather
Energy – Crude Oil, Products, Natural Gas, Coal, LNG

• Clearly understand each of the stages and processes of foreign exchange trade and settlement, and fully comprehend how each phase is related to the larger process flow
• Have a clear understanding of operational risk in the context of FX and be able to manage effectively all the processes
• Obtain a clear insight into practices that may mitigate some of the operational risks that are specific to the FX industry
• Assess the reduction of operational costs
• Understand the key best practices that are used in the FX industry, current developments and future directions
• Understand the global market structure, prevailing regulatory landscape, and players in FX & Commodity markets
• Understand the basic pricing principles and market conventions of retail traded financial instruments in FX and Commodity markets
• Understand the characteristic fundamental forces which impact individual FX & Commodity markets and identify sources to mine fundamental data, indicators, news, and event announcements to make basic value judgments
• Apply common FX and Commodity trade strategies effectively to monetize trade opportunities or express market views

• Introduction to Forex and Commodities Derivatives
• Types of Products – Participants and functions
• Exchange-traded versus OTC derivatives.
• Introduction to FX Markets
• FX Linear Products (Spots, Forwards, CFDs) and FX Derivatives (Futures and Vanilla Options
• FX Brokers and Exchanges
• FX Fundamentals analysis, Trading, and Strategies
• Introduction to Commodities Markets and Exchanges
• Commodities Trading and Trading Strategies

• Types of instruments (future, options)-Basics and Payoffs
• Pricing Commodity derivatives and Currency derivatives
• Hedging, Speculation, and Arbitrage

• Instruments available for trading
• Pricing of commodity futures
• Trading Clearing, Settlement, and Risk Management
• Use of commodity futures in hedging, speculation, and arbitrage

4. Forex – Exchange rate

• Fixed and floating exchange rate regime
• Factors affecting the Concept of quotes
• Tick-size Spreads
• Spot transaction and forward transaction 

• Trading, Clearing, Settlement, and Risk Management
• Rules governing commodity derivatives exchanges.
• Implications of sales tax.

Session 1

• The Foreign Exchange Marketplace
• We begin this course by setting the scene and examining nature and extent of the foreign exchange market.
• The size of the market
• Who the participants are (both key players and occasional users).
• How the market is developing and its past growth.
• Basic Foreign Exchange Principles
• How foreign exchange operates.
• We provide a range of examples that clearly illustrate the operation of foreign exchange markets in terms of the transactions, how they are processed and how they are settled.
  What does the jargon mean – we explore foreign exchange definitions.
• Foreign exchange settlements – Correspondent banking and Continuous Linked Settlement (CLS).

Session 2
 

• Operational Risk
• What is the risk?
• What are the different types of risks that effect foreign exchange operations?
• Why operational risk is ‘special’
• How do these risks affect the bank
• The Theory of Managing Risk
• The Model
• Managing operational risk
• Risk analysis
• Risk impact/frequency

Session 3

• Foreign Exchange Best Practice
• What are best practices?
• We explore how using these practices may also help to reduce the level of risk in the foreign exchange market more generally.
• How can these practices help reduce operational costs?
• Future Trends in Foreign Exchange
• What are the major trends in the foreign exchange market today and how will the foreign exchange operational risk
  Management’s role in effective risk mitigation.
• Why operational risk is ‘special’.
• The Foreign Exchange Process Flow

Using Foreign Exchange Best Practice to Manage Risk
What are the risks?
The best practices used to mitigate these risks.

Session 4
Pre-trade preparation
Know your customer, Documentation requirements, Master netting agreements, Agreement on trading and operational practices.
Trade capture
Entering trades, Using Straight-Through-Processing, Use of real-time credit monitoring, Standing settlement instructions.

Session 5
Confirmation
Special requirements for confirming by non-secure means (structured or nonstandard trades, confirming by telephone), Controls electronic trading platforms, Verify expected settlement instructions, Netted transactions, Internal transactions – Block trades and split allocations, Third-party advice, Confirmation matching process, Exception processing, and escalation procedures.
Netting
Online settlement netting systems, Bilateral net amounts, Cut-offs for netting, Consistent operational practices, and documentation.

Session 6
Settlement

• Real-time nostro balance projections, Electronic messages for expected receipts, Cancellation and amendment facilities, Payment failures, Thee settlement process and settlement exposure, Crisis situations outside your organization.
• Nostro reconciliation
• Nostro account reconciliation, Identify non-receipt of payments, Operational standards for nostro account users.
   

Session 7

• Accounting & financial control processes
• General Ledger reconciliation, Daily position, Profit & Loss reconciliation, Daily position valuation, Trade prices for Off-Market Rates.
• General Best Practices for Managing Foreign Exchange Operations Risk
• Segregation of duties, Business, and operational roles, Understanding operational risks, Procedures for introducing new products, new customer  types, or new trading strategies, Control system access,  Audit/risk control groups, Operational performance measures, Outsourcing & industry standards and best practices, Recordkeeping,  Contingency plans