How the Financial Markets Work
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A practical guide shows you how various securities are constructed, the risks they pose, how to value them, how they interrelate, and about the timing of their issuance

  • Course Instructor

    Financial markets specialist with over 25 years experience in all major asset classes including fixed income, equity and property investment.

Course overview

In the past few years global capital markets have undergone profound changes. Many market participants have disappeared or been restructured. Governments and Central Banks are playing an unprecedented policy role in reshaping the investment and financing landscape. Against this backdrop of change, an altered array of investment alternatives is emerging.

'How the Financial Markets Work' is the course that examines government debt issues, corporate securities and euro-markets and their startling changes in value since 2008 through the past year.

You will learn how various securities are constructed, the risks they pose, how to value them, how they interrelate, and about the timing of their issuance. The process of selling government and corporate securities is described step by step. You will learn how companies are valued, how their shares are distributed, and how returns on equity can be measured. The course also looks at securities where equity takes on characteristics of debt - or the reverse.

Various derivatives markets are explored, with the focus on ways in which futures, swaps and options may be combined with debt and equity to alter risk and return. A thorough explanation of credit derivatives, asset and mortgage-backed securities is provided.

Summary of course content

  • Global short, medium and long term funding and investment alternatives
    • Who are the investors and issuers?
    • What role do hedge funds play?
    • How is financial intermediation changing?
  • Government securities and yield fundamentals; which have held up best?
  • How are Central Banks and policy makers reshaping markets?
  • Asset and mortgage-backed securities; applications, continuing concerns
  • Changing role for credit rating agencies?
  • Valuing debt and equity securities
  • Convertibles and debt with warrants
  • Listing and Trading on an Exchange
  • Block Trades and “Dark Pools”
  • Futures, forwards, swaps and options and their applications
  • Understanding foreign exchange volatility
  • What is the future of credit derivatives?


Active participation is encouraged to ensure understanding and reinforce concepts. You will be provided with complete lecture notes, cases, and selected readings to serve as a reference.

Who should attend this training course?

This course is suitable for those who want to gain an overall perspective on financial markets from banks, financial institutions and corporations, etc.

  • Analysts
  • Risk Managers
  • Credit Managers
  • Traders and Dealers
  • Financial Consultants
  • Financial and Treasury Managers
  • Accountants and Auditors
  • Lawyers and legal professionals

Supporting publications:



Day 1

Themes: Overview of capital markets; government securities and money markets; role of rating agencies

Global capital markets: An overview

  • Forces of change and the challenge of volatility in Asian markets
  • Broadening the range of financing alternatives

Risk, return and expectations

  • How financial markets determine price
  • Efficient markets and rational expectations?
  • The influence of rating agencies on country risk and other ratings

The major instruments and how they interrelate

  • Money markets vs. Bonds and fixed income securities
  • Equity markets
  • Asset securitsation
  • Derivative markets

Government securities and yield curves

  • Widely traded sovereign instruments
  • Discount and interest bearing securities
  • Nominal and effective yields

Interpreting yield curves

  • Liquidity and volatility
  • Inflation and monetary policy
  • "Riding the Yield Curve"
  • Implied forward rates

Central banks and capital markets

  • Central Banks and inflation
  • Tools for policy implementation
  • Watching Central Banks for rate movements

Security auctions

Repo agreements

  • Repos and reverse repos
  • Dealer selection
  • Examples of use

Short term funding and investment instruments in domestic and euro-markets

  • Negotiable certificates of deposit
  • Bankers’ acceptances
  • Commercial paper
    • Role of the rating agencies
    • How do they differ from equity analysts?
    • “Asean” rating agencies
  • Underwriting process

Day 2

Themes: Medium and long-term debt instruments; asset-backed securities

Intermediate funding and investment alternatives

  • Bank leveraged loans/syndicated financing
    • Primary and secondary markets
    • Participations and assignments
  • Bond markets
    • Publicly traded securities
    • Private placements (including U.S. Rule 144A)
    • Euro-bonds
    • Asian capital markets: Underwriting and distribution
    • Secondary markets for fixed income securities


  • Calculating duration and modified duration
  • Applications in asset liability management
  • Modified duration

Workshop: Valuing securities with more than one coupon payment and calculating duration

Asset-backed securities

  • Establishing a special purpose vehicle that is bankruptcy remote
  • Securitising credit card receivables
  • Considering other consumer debt
  • Mortgage-backed securites
  • Fall-out from sub-prime securitisations?

Case study: Assessing credit risk in an asset-backed transaction

Debt/equity hybrids and uncommon equity

  • Convertible debt and debt with warrants
  • Valuing these instruments
  • Convertible preferred stock
  • Uncommon equity with imbedded options

Day 3

Themes: Equity markets and share issuance; M&A topics; derivatives

Equity markets

  • Issuers and investors
  • Underwriting and distribution
  • Listing decisions and stock exchanges  
    • Block Trades and “Dark Pools”
    • “Flash Trades”

Determining stock price: Valuing common and preferred shares

  • Popular multiples
  • Various models for valuation
    • Discounting Cash Flows (DCF)
    • Using the Capital Asset Pricing Model (CAPM) and betas

Valuing companies for initial public offerings, acquisitions, divestiture, etc.

  • Forecasting performance
  • Using CAPM
  • Weighted Average Cost of Capital (WACC)

Case study: Valuing an acquisition target

Derivative instruments: How they are derived traded and used

  • Origins of the markets
  • Identifying exposure to price risk
  • Hedging vs. insurance products
  • Symmetry and asymmetry of risk

Financial Futures and Forward Rate Agreements (FRA's)

  • Futures market: Brokers, traders and the clearing corporation
  • Margin requirements
  • Survey of contracts
  • Calculating tick values
  • FRA's compared to futures

Introduction to swaps

  • Product evolution
  • Swap applications
  • Terminology and quoting conventions

Workshop: Pricing interest rate swaps

  • Calculating cash-flows, IRR's and settlements
  • How intermediaries make a market
  • Default risk

Day 4

Themes: Interest rate options and other price volatility risk management; credit derivatives

Using interest rate options

  • Caps floors and collars
  • Option pricing considerations

Foreign exchange and international linkages

  • Spot, forward and future foreign exchange markets
  • How currencies are quoted

Exchange rate determination

  • Balance of payments
  • Central bank influences
  • Purchasing power parity

Cross-currency swaps

  • Markets, participants, and role of the intermediary
  • Compared to foreign exchange forward contracts
  • Combining swaps with other instruments for an all-in lower cost, or improved yield
  • Default risk

Currency options

  • Definitions and types
  • American and European options
  • Hedging applications

Credit-Linked Swaps (CDS) and other derivatives

  • Hedging against credit downgrade or loss
  • Credit Default Swaps (CDS)
  • Total Return Swaps (TRS)
  • Credit put options

Self-test and wrap-up

  • The Course Director has 25 years experience in financial markets, gained in senior positions at leading financial institutions including Rothschild and Threadneedle Asset Management. His experience spans all major asset classes including fixed income, equity and property investment, and his responsibilities have included investment strategy formulation, portfolio construction, treasury management, risk analysis and the use of derivatives for position taking and risk management.

    In his early career he was a quantitative analyst and was the recipient of the Institute of Investment Management and Research prize for Statistics and Financial Mathematics. Through board level positions at specialist boutique finance houses he has gained considerable experience of alternative asset classes, structured products and derivatives.

    He is a long-standing member of the CFA UK’s examination panel, with particular responsibility for the Fixed Interest and Economics subject areas for the Investment Management Certificate (IMC) qualification. He has been a guest lecturer at the London Financial Academy and on MSc Finance courses at London Metropolitan University. His teaching style is highly interactive, using worked examples and case studies wherever possible to bring the course material to life and welcomes questions and discussion, particularly regarding the application of theory to real life situations.

    He has published a book on asset management and recently authored an article on risk management for Bloomsbury Press. A lawn tennis tour professional in his youth, he now spends his leisure time participating in (and recovering from!) triathlon events.

    Courses run by this instructor

    4-5 Star Hotel in Singapore, Singapore,

    All of our courses are held in 4 – 5 star hotels, chosen for their location, facilities and level of service. You can be assured of a comfortable, convenient learning environment throughout the duration of the course.

    Due to the variation in delegate numbers, we will send confirmation of the venue to you approximately 2 weeks before the start of the course. Course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.