BANK TREASURY COURSE Presented by Mss. TCHATA CATHERINE in Yaounde Cameroon

BANK TREASURY LECTURE Developed & Presented on Feb 2015

by Mss. Tchata Catherine

Developed By: Mss. TCHATA CATHERINE PRESENTATION PLACE -DATE [email protected] Cameroon - February 2015

mailto:[email protected]

THE LECTURE FEES CAN BE PAID ON OUR BANK ACCOUNT

D Lecture fees Chose your Price and pay the amount that qualify your level of satisfaction Mss. Tchata Catherine Bsc. MA. MBA. Managing Director of TREASURY CONSULTING INFO, sarl

COURSE OUTLINE

• DEALING ROOM STRUCTURE

• DEALING ROOM STAFF

• THE MONEY MARKET DEALING DESK

• THE DEALER’S LIMITS

• THE DEALER’S WORKFLOW

• DEALING ROOM COMMUNICATIONS & ETHICS

Developed By: Mss. TCHATA CATHERINE PRESENTATION PLACE - DATE [email protected] Cameroon - February 2015


DEALING ROOM STRUCTURE

• IN THIS TOPIC WE EXPLORED

1. Foreign Exchange Dealing Desk

2. Money Market Dealing Desk

3. Corporate Dealing Desk

4. Dealing Room Review Question



• Foreign Exchange Dealing Desk The Foreign Exchange desk specializes in foreign exchange spot dealing and foreign exchange forward dealing • Money Market Dealing Desk Money market dealing involves the borrowing or lending of funds under agreed conditions. Money market instruments include: call deposits, fixed deposits, certificates of deposit, T-bills, Commercial paper, Repos and bills of echange.




• Corporate Dealing Desk This section of the dealing room facilitates requests from corporate customers for specific deals in the money market or the foreign exchange market. This section does not usually make prices. Dealers act as salespeople’ in the dealing room.

• Dealing Room Structure Review Question Corporate dealer act on requests from their customers for specific deals in which one of the following dealing desk? a) Money Market only b) Foreign Exchange Market only c) Money Market and foreign exchange market Developed By: Mss. TCHATA CATHERINE PRESENTATION PLACE - DATE [email protected] Cameroon - February 2015



• Answer to Dealing Room Structure Review Question

Corporate dealer act on requests from their customers for specific deals in the:

a) Money Market only

b) Foreign Exchange Market only

c) Money Market and foreign exchange market

you are Right, the Correct answer is C) because corporate dealer can facilitate requests for deals in both the money market and the foreign exchange market.




• IN THIS TOPIC WE EXPLORED

1. Dealing Room Staff description

2. The Chief Dealer Position

3. The Senior Dealer Position

4. The Junior Dealer Position

5. The Money Market Dealing Desk


DEALING ROOM STAFF


• Dealing Room Staff

• The number of people in the dealing room can vary widely, but the basic structure is fairly consistent. The chief dealer supervises all dealing room activities.

• Each section is headed by a senior dealer, who supervises the

work of the other dealer, including junior and trainees. • Let’s examine each type of dealer in little more detail.


DEALING ROOM STAFF


• The Chief Dealer

Chief Dealer are responsible for all activities in the dealing room. At the end of each day, they receive a report on the day’s activities from the various sections, although in practice these days chief dealers normally are able to monitor dealer positions , profits and losses etc. In real time. Chief Dealers report to the senior management in charge of money market operations, typically the Treasurer or Chief Financial Officer of the Firm. They must also have a second in command to assume responsibility in thier absence.

Developed By: Mss. TCHATA CATHERINE PRESENTATION PLACE -DATE [email protected] Cameroon - February 2015

DEALING ROOM STAFF


• Senior Dealer The Senior Dealer is responsible for all the transactions that take place in thier section. The dealer will execute the customer orders but also run position for the profit of the firm. This means they will buy and sell money or money market product with the intention of making a capital gain, sometimes within the course of a trading day, sometimes within the course of Trading day, sometimes over a longer period of time. Senior Dealer will report the section’s position to the chief dealer at the end of the intention of making a capital gain, sometimes within the course of a trading day, sometimes over a longer period of time. Senior Dealer will report the section’s position to the chief dealer at the end of the day and may also consult the chief dealer in the even of any problems that may arise.


DEALING ROOM STAFF


• Junior Dealer

Junior dealers and trainees provide support to the other dealers by keeping positions up to date, keeping in touch with the back office etc.

They also learn how to run positions themselves, although usually with vary limited amounts of risk.


DEALING ROOM STAFF


• Staff in Money Market Dealing Desk The Dealer on money market dealing desk will normally be divided according to currencies and products. For example, we could have a USD (currency) deposit and CD (Call deposit) dealer, sitting alongside a EUR denominated commercial paper dealer. The Larger the dealing desk the more specialized the dealers can be. In smaller dealing rooms they may have to cover many different markets. Dealer will work within strick guidelines relating to the type of deals they can undertake and also the counterparties with whom they can deal. These are known as thier limits and are typically set for regard to the amount of risk to which they migth expose the firm.


DEALING ROOM STAFF


THE DEALER’S LIMITS


• IN THIS TOPIC WE EXPLORED A dealer’s limits can include the following:

1. Currency

2. Credit

3. Counterparty

4. Instrument

5. Maturity

6. Deal Size

7. Position


• 1) Currency

Different currencies have different volatilities and therefore the firm may have to impose differing limits according to the type of currency being traded.

• 2) Credit

Many money market transactions involve direct lending and borrowing. This causes significant credit risk. These risk have to be evaluated and then a limit is set according to the creditworthiness, that is the ability to pay of the name.




Information Relevant to Bank Accounts Opening

• 3) Location The location of the account defines the legal framwork for the operation of the account, and rules regarding if and how interest is to be paid.

• 4) Currency Account can be opened in local or foreign currency; can can restriction for opening a foreign currency accounts. Independant of the actual location of the account, the currencies are always cleared in the country of the currency.




• 5) Maturity Although most money market product cover a maturity of less than a year, the dealer may still have differents limits imposed for different limits imposed for different maturity products. Again, this is to give protection against losses for less popular periods.

• 6) Deal Size The size of a deal can directly link to the amount of experiences the dealer is taking on their book. If a dealer is transacting a customer order, for example buying from the market and then directly selling to the customer, the deal size is not very relevant. If on the other hand, the dealer is buying to hold on position there may well be a limit to the maximum size they would be allowed to take a any one time.





THE DEALER’S LIMITS • 7) Position Position limits will pay respect to all the other limits in terms of what a dealer is allowed to hold and for how long. Position limits can have two dimensions: dayligth limits and end of day limits. Daylight limits are the positions the dealer can hold during the trading day when they are there to monitor the risk. End of day limits are the positions they can hold on thier books at the end of a trading period.

• 6) Deal Size Adealer’s primary responsibilities relate to actual dealing and position taking. This includes: • Proper recording of all transactions • Maintaining and monitoring of all position record • Compliance with intenal and external limits and regulations



THE DEALER’S LIMITS • 8) Position Taking

Position taking refers to the process by which a dealer buys or sells financial instruments, currencies etc. In anticipation that their prices will subsequently move in a certain direction. If price move favorable, the position taken will be profitable for the dealers.

REVIEW QUESTION of DEALING ROOM STAFF


Review Question of Dealing Room Staff

• Which one of the folowing staments is correct in relaton to dealing room staff and structure?

1. Due to the short-term nature of money market instruments, maturity is not a factor in setting limits for money market dealers.

2. End of day limits are limits on the position the dealer can hold during the trading day

3. There is no limits to the deals a dealer can transact with a particular counterparty

4. A dealer may have different limits for different currencies traded

Answer: you are rigth because the correct answer is 4 and not 3 because there are limits on the size of transaction that a dealer can have with a counterpaty.



Thank You For your Attention !



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BANK TREASURY COURSE Presented by Mss. TCHATA CATHERINE in Yaounde Cameroon

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