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Clearing and Settlement of Derivatives

Book Description

This book makes the reader aware of the background to the derivatives markets, how they have developed and their importance today.

Clearing and Settlement of Derivatives addresses how and why derivative products are used and how the industry is structured, looking at both the exchange and over-the-counter markets. The role of the various parties is explained and the interaction between securities, commodities and derivatives explored.

The key regulation that affects the use of derivatives by banks, corporate companies, institutional investors and private clients is covered and by way of example, the book reviews the various Directives affecting investment funds’ use of derivatives, capital adequacy requirements on banks and guidelines for private client use. The regulations looked at will be international, making this book suitable for most UK, European, and North American markets.

* Informs and educates the reader about derivative products and everything that happens when trades take place without using confusing technical detail and unexplained jargon
* Explains the background to derivatives and the market infrastructures and regulation in a clear and easy to read way
* Deals with the extensive procedures and processes involved in lively, easy to follow "road maps"

Table of Contents

  1. Cover
  2. Contents
  3. Preface (1/2)
  4. Preface (2/2)
  5. Acknowledgements
  6. Disclaimer
  7. The development of futures and options and OTC derivatives
    1. The first futures market
    2. The emergence of financial futures and options markets
    3. The first options markets (1/2)
    4. The first options markets (2/2)
    5. Summary
  8. Derivative products (1/4)
  9. Derivative products (2/4)
  10. Derivative products (3/4)
  11. Derivative products (4/4)
    1. Over-the-counter derivatives
  12. The role of the clearing house
    1. Eurex AG
    2. The Options Clearing Corporation (OCC)
    3. LCH.Clearnet
    4. Risk management
    5. Summary
  13. Futures processing
    1. Futures trading
    2. Clearing process
    3. Use of futures
    4. Futures clearing and settlement
    5. Variation margin
    6. Initial margin
    7. Futures delivery
    8. The delivery process
    9. LCH.Clearnet.Clearnet delivery procedures
    10. The process of delivery
    11. The delivery process of Gilts through CREST
    12. Commodity futures delivery
    13. Physical delivery of LME contracts
    14. The SWORD system
    15. Soft commodities
    16. Workflow road map (1/2)
    17. Workflow road map (2/2)
    18. Summary
  14. Options processing
    1. Workflow road map
    2. Option exercise and assignment
    3. Exercise and assignment procedures
    4. Delivery
    5. Summary
  15. OTC products
    1. Forward rate agreements
    2. Swaps
    3. Equity swap cash flow
    4. Over-the-counter options
    5. Settlement of OTC products
    6. The post-trade environment
    7. Event calendar
    8. Communication/Information
    9. Other settlement issues
    10. Accounting and regulatory issues
    11. SwapClear
    12. Benefits of netting
    13. SwapsWire
    14. Summary
  16. Using derivatives in investment management
    1. Introduction
    2. Basic illustration of derivatives use in asset allocation
    3. Income enhancement
    4. Hedging
    5. Speculation and exposure taking
    6. Use of OTC derivatives
    7. Regulation and compliance
    8. Summary
  17. Margin and collateral
    1. Initial margin
    2. An explanation of delta
    3. Intra-day margin
    4. Spot month margin
    5. Margin methods
    6. Margin offsets
    7. Variation margin
    8. Tick size
    9. Option margin
    10. Settlement of option margin
    11. Collateral
    12. Acceptable collateral
    13. Margining to a client
    14. Single currency margining and settlement
    15. Margining OTC positions
    16. Summary
  18. Impact of corporate actions
    1. Introduction
    2. OTC derivatives
    3. Summary
  19. Operational risk
    1. Identifying and managing specific risks
    2. Mapping operational risk in a derivatives operations environment
    3. Specific operational risks
    4. Recognising, measuring and managing operational risk
    5. Summary
  20. Glossary of derivatives terms (1/8)
  21. Glossary of derivatives terms (2/8)
  22. Glossary of derivatives terms (3/8)
  23. Glossary of derivatives terms (4/8)
  24. Glossary of derivatives terms (5/8)
  25. Glossary of derivatives terms (6/8)
  26. Glossary of derivatives terms (7/8)
  27. Glossary of derivatives terms (8/8)
  28. Appendix
    1. Euronext.liffe equity index future contract specification
    2. Euronext.liffe listed option contracts
    3. IPE exchange for physicals (1/2)
    4. IPE exchange for physicals (2/2)
    5. IPE expiry dates (1/3)
    6. IPE expiry dates (2/3)
    7. IPE expiry dates (3/3)
    8. LME copper brands
    9. FSA derivatives and warrants risk warning (1/2)
    10. FSA derivatives and warrants risk warning (2/2)
    11. Useful websites and suggested further reading
    12. Euronext.liffe corporate action policy (1/2)
    13. Euronext.liffe corporate action policy (2/2)
    14. SPAN
    15. TIMS
  29. Index (1/2)
  30. Index (2/2)