Mastering Derivatives Markets : A Step-by-Step Guide to the Products, Applications and Risks, 4th Edition

1. Background and development of the derivatives markets

• Market background
• Introduction
• Key features
• Uses of derivatives
• Range of derivatives
• Increasing use of the Central Counterparty Model (CCP)
• Risk and benchmarking
• Market volumes
• Users and uses of derivatives
• Straight Through Processing (STP)

2. Market fundamentals

• Introduction
• How banks generate income
• Three key assumptions
• Role and use of LIBOR
• Day counts
• Financial maths
• Calculating forward rates
• Marking to market
• Yield curves
• Quiz

 3. Risk — a Primer

• Introduction
• Finacial risks: markets, credit, liquidity
• Operational risk
• More esoteric risks

4. Derviatives Fundamentals

• Range of derivatives   
• What is a vanilla trade?
• Settlement
• Triggers
• Liquidity and credit risk
• Understanding the 'underlying'
• Benchmarks
• Fair value
• Dealing with derivatives

5. Basic option concepts

• Introduction
• Option pricing
• Option mechanics

6. Interest rate derivatives — single settlement instruments

• Introduction
• Single settlement interest rate derivatives
• Financial futures contracts
• Forward rate agreements (FRAs)
• Interest rate options (IROs)
• Quiz

7. Interest rate derivatives

• Introduction
• Interest rate caps and floors
• Interest rate collars
• Interest rate swaps
• Quiz

8. Benchmarking in the OTC derivatives markets
Penny Davenport, Manging Director, Markit Document Exchange and Gavan Nolan, Vice President,  Credit Research, Markit Group

• Financial benchmarking for derivatives
• Liquidity benchmarking for derivatives
• Operational risk measurements for derivatives
• Conclusion

9. Currency derivatives

• Introduction
• Over the counter currency options
• Currency options: reduced premium strategies
• Simple exotic structures
• Currency swaps
• Exchange-traded instruments
• Quiz

10. The impact of electronic trading on the FX Market
Ray McKenzie, Vice President, ICE

• The early years
• FX as part of a commodity portfolio
• First electronic dealing platforms
• Electronic market making
• Phases I and II
• Point and click vs algo traders
• The impact of the credit crisis on banks' FX trading
• Phase III

11. Credit derivatives

• Introduction
• What is credit risk?
• Styles of trading
• The first deals
• Range of credit derivatives
• Credit default swaps

12. Central clearing and the OTC market
Bill Hodgson, Founder and CEO, The OTC Space Ltd

• The basics
• Trade execution
• Risks and mitigation
• Getting trades into clearing
• The business case and benefits
• Predictions for market development
• Terminology

 13. Equity derivatives

• Introduction
• Background
• Single stocks or equity indices?
• Stock index futures
• Stock index options
• Single stock options
• Equity index swaps

 14. Commodity derivatives

• Introduction
• Exchange-traded energy derivatives
• Exchange-traded futures contracts
• Exchange-traded energy option contracts
• OTC or ‘off-exchange’ energy derivatives
• OTC option products
• OTC oil swaps

15. Carbon derivatives and environmental products
Emilie Mazzacurati, Point Carbon, a Thomson Reuters company

• What are carbon markets?
• Volumes and value
• Overview of regulation
• Carbon instruments
• What drives carbon prices?
• Trading carbon: in practice
• Conclusion

16. Regulation in the derivatives markets
Eric Salomons, Associate Director, Dubai Financial Services Authority (DFSA)

• Why regulate the derivatives market?
• Who regulates the derivatives market?
• Regulatory models and objectives
• Supervisory aims — equal access to markets
• Market integrity
• Market abuse and manipulation
• The role of market surveillance
• Efficient markets
• Continuing regulatory challenges

Glossary
Answers to Quizzes
Index