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Fundamentals of Financial Derivatives Nairobi, Kenya 15 th - 16 th November, 2018
Fundamentals of Financial Derivatives
Nairobi, Kenya
15th - 16th November, 2018
COURSE BRIEF
Over the past few years, the use of derivatives as the preferred method for hedging and risk
management has increased. The importance of the derivatives market was highlighted in the 2008
financial crisis when excessive and improper use led to a global financial meltdown. The critical lesson of
the past crisis is that derivative transactions are becoming more important than ever. Kenya has not
been left behind in the race to modernise its financial industry. As we prepare to launch a
derivatives exchange in Kenya, it is important to demystify the notion that financial derivatives
are complex financial instruments. This course serves as an introduction to the world of derivatives and
participants will acquire holistic understanding of derivatives to become modern financial practitioners.
COURSE OBJECTIVES
• Understand the mechanics and application of basic derivative contracts: Forwards, Futures, Swaps and Options.
• The difference between exchange-traded and OTC derivatives.
• Clearing procedures for exchange-traded derivatives
• Understanding the mechanics of single stock and stock index futures for the Kenyan market.
• Apply knowledge gained in investment and risk management decisions
WHO SHOULD ATTEND? • Traders in the financial services industry
• Stock-brokers.
• Investment analysts
• Securities market professionals
• Investment managers
• Corporate and bank treasurers
• Risk managers
COURSE FEATURES • 2-day seminar on derivatives
• Day 1. Understanding simple financial derivatives products
• Day 2. Understanding options and role of clearing house
• A quiz at the end of day 2.
• Certificate of participation and attendance.
• Cost: USD 250 EX VAT
• Venue: Apollo Centre
METHODOLOGY This course will use interactive lectures, worked examples and real-world and local case studies showing
in detail how financial derivatives are used and why. It will show the products in a highly practical
way, without over-complication, with clear illustrations of each so that participants may readily
understand them.
REGISTER HERE
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COURSE CONTENT
Day 1: Building Blocks of Derivative Contracts
Introduction to Derivatives
a. What are derivatives?b. The basic building blocks: futures, forwards, swaps and optionsc. Exchange traded vs. Over the Counter (OTC) instructionsd. Types of traders in the derivatives marketse. Applications of derivatives
Forwards and Futures: Mechanics and Valuation
a. Basic mechanics of forward and futures contractsb. Applications of forward and future contractsc. Introductory valuation concepts for forward and futures contractsd. Application: Hedging FX exposure using forwards and futures
e. Application: Case study: KQ- hedging jet fuel costs
Single Stocks and Stock Index Futures
a. What are Single stock futures?b. What are Stock index futures?c. Constructing examples of Single stock future using Kenya’s stock marketd. Constructing examples of Stock index futures using Kenya’s stock market
e. Application: Portfolio management - Hedging using stock index futures
Day 2: Understanding options and the role of clearing houses
Options: Mechanics and Valuation a. Introduction to option terminologyb. Options on equities and indexesc. Fundamental concepts in option valuationd. Factors that impact options valuee. Application: Portfolio management – Hedging using optionsf. Application: Example of option trading using Kenya’s stock market.
Clearing house: Central Counterparty a. What is a clearing house/ Central counterparty?b. The structure of a clearing house.c. Role of the clearing house in exchange traded transactions.d. Role of clearing house in OTC derivative transactions and new trading venues (ex. MTFs and ATSs).e. The margining system and how it works.
Closing Remarks: Trends and developments since the global financial crisis a. Higher capital requirementsb. Centralised clearing of OTC-Traded derivatives etc.c. Financial innovation: some newer products and types of derivatives: weather, disaster, credit, exotics
SPEAKERS’ PROFILES
ARTHUR MULWA MUTUKU
Arthur is a finance professional with a background in Commodity Trading and Business Analysis. His
strengths lie in financial modelling, risk management, analytics, and derivatives trading. Arthur has over
five years’ experience in trading and using derivatives for risk management having worked at Credit
Suisse as a trader for seven years. Arthur is an excellent trainer with over five years training experience
in the financial services industry. Arthur brings on board the practical aspects on trading derivatives and
how they are used for risk management.
CHRISTOPHER GRUNE MBA, CFA, CQF, PRM
Christopher’s is the managing director at Barani capital and the chief investment officer at Inside
Consulting Partners. He is a senior consultant with the world bank and has over 25 years’ experience
spanning, forex forward dealing, options analysis, fixed income derivatives trading, quantitative research
analysis and portfolio management. Having worked in numerous quantitative roles at Société Generale,
Credit Lyonnais, CITI and State Street Global advisors, Chris injects a fresh blend of theory and practice
into the training. His knowledge in the global financial system and strong academic background will
benefit the participants especially on how the Kenya market fits into the global and use practical devices
in demonstrating how trading in derivatives takes place on the exchange.
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ABOUT AFRICA RISK INSTITUTE
Africa Risk Institute is a professional services firm majoring in financial advisory, training and placement services for individuals and corporates across Africa. See more details on Africa Risk Institute in the fact sheet below.
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