INTRO TO DERIVATIVES, ISDA & COLLATERAL

Course Details

This one-day course is a perfect introduction to the OTC derivatives market and gives delegates an overview of what derivatives are, and how they are used. It walks through the benefits of an ISDA® agreement (including the netting benefits and the main credit protective mechanisms). It unpacks how collateral further enhances the protections offered by the ISDA® and outlines the operational and practical aspects of collateral management under the new regulatory regime and the VM CSA. A high-level overview of the requirements for initial margin is also covered. Audience: This course is suitable for any person new to the derivatives market who wants to gain an overview and insight into the market and how it operates from a legal, credit and operational perspective. Graduate recruits and new joiners will find this course invaluable. Agenda: What is an ISDA®, what products it covers, the key benefits an ISDA® provides for Different types of derivatives: OTC, exchange-traded & centrally-cleared (through a central counterparty) The role of derivatives in hedging risk The documentation structure of an ISDA® The structure of an ISDA® & the netting benefits (settlement netting, close-out netting & set-off) The main events of default & how they trigger The main termination events in an ISDA® What role collateral plays in derivatives & how a CSA interacts with an ISDA® What is collateral & why is it so important? The operational & credit aspects of the collateral agreements: how to calculate exposure; what collateral is required; thresholds; minimum transfer amounts; independent amounts; delivery amounts, return amounts & valuation percentages Over-collateralisation risk Collateral management as a key focus of the regulatory requirements Variation margin versus initial margin The regulatory requirements for variation margin, & initial margin, for uncleared derivatives under the Financial Markets Act Which entities & products are in-scope for the margin rules The meaning of covered transactions & which transactions the new VM CSA should cover The various options of how to pay interest The impact of having multiple CSAs, setting-off against other CSAs, netting collateral calls across multiple CSAs Eligible collateral & valuation percentages Minimum transfer amounts & how they are apportioned across multiple CSAs Who will initial margin apply to? How to calculate IM AANA thresholds Calculating IM exposure Custodians & the role they play in IM