The purpose of this course is to give you a thorough review of the new derivatives regulation and good understanding of how these changes will impact derivatives markets and the businesses of banks and other institutions.
We start with a quick review of the events that lead to the realization of the need for wholesale changes to how OTC derivatives are settled, collateralized and reported. We also give an overview of the regulatory initiatives that were initiated at the Pittsburgh G20 meeting in 2009 and that have since lead to a raft of new regulation, including the Dodd-Frank Act in the U.S. and the EMIR in the EU.
We then look more in-depth into the key requirements of the different regulations, our main focus being on EMIR. We explain why, how and when OTC derivatives should be moved to centralized clearing, and we discuss the practical implications of this move: Standardization of derivatives transactions and posting of initial and variation margin. Further, we thoroughly explain and illustrate the requirements for risk mitigation of non-cleared derivatives and for reporting of all derivatives transactions. We also discuss how collateral management practices should be implemented or adapted to effectively meet these requirements.
Finally, we explain and discuss how the profound changes to the derivatives markets infrastructure will affect the way that derivative instruments are traded and used for risk management purposes in banks, insurance companies, pension funds and non-financial corporations. We also discuss possible changes to banks' and other institutions' business models and other strategic initiatives in response to the new regulation.
The course is highly relevant to everyone involved in derivatives trading, settlement and risk management.