Lifecycle and Clearing of OTC Derivatives Trade

This one-day program provides an introduction to the trade lifecycle and clearing of OTC Derivative trades. Participants will explore the functional building blocks of middle and back office operations that support OTC derivatives trade lifecycle activity for both dealer and end-user trades. Areas of operational risk and exposure will be highlighted throughout the program. The program content includes an introduction to the basic lifecycle stages of an uncleared or bilateral swap, but the main focus is on CCP clearing for both dealer and client trades. The industry is still in transition as the trade lifecycle of an OTC Derivative requires re-engineering to comply with the demands of CCP. The program will highlight emerging trends, issues, challenges, and questions still to be addressed.

Course Objectives

By the end of the course, participants will be able to:

• Analyze the functional building blocks of the trade lifecycle of an OTC derivatives trade
• Identify the participants and their roles, including the customer or end-user, bank broker/dealer, interdealer broker, exchanges and SEF’s (Swap Execution Facilities), clearing houses, custodians and prime brokers
• Distinguish the role of Clearing Houses and the margin process
• Evaluate the collateral management process for swaps
• Be able to explain why novations are done and how they are processed
• Consider the impact of industry regulatory changes, such as Dodd-Frank regulation on OTC derivative central counterparty clearance (CCP)

Suggested Prerequisites:

• Fundamentals of the Capital Markets / Securities Industry
• Derivatives or equivalent knowledge

Program Level:Foundational

Advance Preparation: Understanding of OTC Derivative product types

Computers and Financial Calculators: N/A

Recommended CPE Credits: 7