Download Managing Derivatives Contracts: A Guide to Derivatives by Khader Shaik PDF

By Khader Shaik

"I am certain practitioners, auditors, and regulators will locate the content material of Mr Shaik's booklet of price. The available type is additionally welcome. All in all, a helpful addition to the finance literature and one who confidently is helping plug the information hole during this field." — from the foreword via Professor Moorad Choudhry, Brunel University

Managing Derivatives Contracts is a accomplished and useful therapy of the end-to-end administration of the derivatives agreement operations, platforms, and structures that help the buying and selling and company of by-product items. This booklet specializes in the techniques and platforms within the derivatives agreement existence cycle that underlie and enforce the actions of derivatives buying and selling, pricing, and danger management.

Khader Shaik, a Wall highway derivatives platform implementation professional, lays out all of the basics had to comprehend, behavior, and deal with derivatives operations. specifically, he presents either introductory and in-depth therapy of the subsequent issues: spinoff product periods; the industry constitution, mechanics, and avid gamers of derivatives markets; forms of spinoff contracts and lifestyles cycle administration; derivatives expertise systems, software program structures, and protocols; derivatives contracts administration; and the recent regulatory panorama as formed via reforms comparable to Dodd-Frank identify VII and EMIR. Managing Derivatives Contracts specializes in the operational methods and marketplace setting of the derivatives lifestyles cycle; it doesn't handle the math or finance of derivatives buying and selling, that are abundantly handled within the typical literature.

Managing Derivatives Contracts is split into 4 components. the 1st half offers a structural review of the derivatives markets and product periods. the second one half examines the jobs of derivatives marketplace gamers, the association of buy-side and sell-side enterprises, severe facts components, and the Dodd-Frank reforms. in the framework of overall marketplace circulate and straight-through processing as limited through regulatory compliance, the center of the publication information the agreement lifestyles cycle from origination to expiration for every of the foremost derivatives product sessions, together with indexed futures and strategies, cleared and bilateral OTC swaps, and credits derivatives. the ultimate a part of the e-book explores the underlying info know-how platform, software program platforms, and protocols that force the end-to-end company of derivatives. particularly, it offers actionable directions on tips on how to construct a platform utilizing seller items, in-house improvement, or a hybrid approach.

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Extra resources for Managing Derivatives Contracts: A Guide to Derivatives Market Structure, Contract Life Cycle, Operations, and Systems

Sample text

There are four types of basic currency swaps: fixed for fixed, fixed for floating, floating for fixed, and floating for floating. In OTC markets, currency swaps are traded in many flavors. Currency swap contracts are also traded in many exotic forms. Most exotic swaps are discussed under the swaps section. Note that the currency interest rate swap is not the same as the FX swap discussed in the FX derivatives section. 39 40 Chapter 2 | The Derivative Products Equity Swaps An equity swap is an agreement between two parties to exchange a set of payments, determined by a stock or index return, with another set of payments from an instrument such as an interest-bearing (fixed or floating rate) instrument or another stock or index.

The annual coupon or premium paid for providing the protection, quoted in basis points. Typically, payments are paid quarterly or semi-annually. The spread is also called the fixed rate, coupon, or price. Contract legs. There are two legs—fee leg and contingent leg. The premium payment side of the contract is known as a fee leg and the protection payment side is known as a contingent leg. Credit events. Events that trigger payouts, such as bankruptcy, failure to pay, obligation default or acceleration, and debt payment moratorium.

Currency swaption. An option contract to enter into a currency swap contract. ■■Note The spot legs of FX derivatives are treated as derivative transactions, not as spot transactions. Applications of FX Derivatives There are three major uses of FX derivatives: Arbitrage. In arbitrage, an investor can create a profit by using simultaneous trades that result into the guaranteed (riskfree) profit from imbalances in market prices. Arbitrage opportunities are short-lived and limited participants profit from them.

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