This training program is designed to provide delegates with practical knowledge about the key concepts, systems, processes and procedures in international securities settlement and global custody services as well as operational risks involved.
You will have a chance to gain skills necessary to facilitate day-to-day transactions and communication processes between all parties involved as well as all stages about clearing and settlement process, the role of exchanges and clearing houses, functioning of the settlements department, role of payments in the settlements.
Day two focuses on the role and functioning of global custody, services provided, derivatives settlements, corporate actions and risk management. You will also learn about the latest sector’s trends and changes.
You will also learn about the impact of the MiFID and T2S - Target 2 Securities initiatives on the market.
The course is conducted by senior experts with many years of international experience and includes many international case studies and exercises.
What will you learn
By attending this program you will gain:
- Practical understanding of international securities settlement processes and custodial services, key players and concepts and relationships between them
- A clear understanding of the operational risks involved in these two services
- An update on recent developments of international securities settlement and custodial services including Target 2 Settlements and MiFID
- An understanding and appreciation of the communication processes between all the parties involved in a given transaction
Main topics covered during this training
- Securities settlement - exploring key concepts and market context
- The relationship between exchanges and clearing houses
- Trade cycle stages
- Understanding the role of a settlement department
- The role of payment systems in securities settlements
- Settlement process including pre-settlement, settlement and reconciliation processes
- European switch to T2S (TARGET 2 Securities) settlement system
- Timing in cash management and Forex exchange
- The role and operations of CLS - Continuous Linked Settlement
- Global custody and derivatives clearing
- Core and value added services in global custody
- Identifying and managing risks in clearing, global custody and settlement
- The impact of 'Corporate actions' in custody services
- Key legal issues
- MiFID Directive
- Exploring industry trends
- Wall Street 101 - an introduction to the securities trade life cycle
- Underlying principles of securities and derivatives settlement
- The structure and operations of a typical securities trading organisation/firm
- Cashiering Firms, Custodians, Commercial & Other Banks, Prime Brokerage
- Clearing - what it is and how it works - basic structures for clearance
- Key Concepts - Beneficial ownership, Collateral, Counterparty credit limits, Daylight overdraft, Default, Dematerialization, Failed transaction, Free riding, Fungible, Internal settlement, Lamfalussy Standards, Loss-sharing agreement and pools, Netting, Settlement date, Standard settlement instruction, Unwind, Zero hour rule
- Capital requirements
- Chain of entitlements
- Immobilisation and dematerialisation
- Processing book entry (electronic) and certificated (paper based) securities
- The role of the exchanges
- The role and function of the clearing house
- The interaction between exchanges and clearing houses
- Derivatives - what they are and how they work
- Derivatives clearing - why the process differs from regular securities; actions to make the process safer.
- Recent changes in the Derivatives clearing process
- Bilateral clearing.
- Central Counterparties
- Nominee Services
- Vault Management (immobilised securities)
- Importance of settlement Relationships and responsibilities
- Management information
- The relationships with the counterparties dealt with in the settlement of a typical trade
- Rules and conventions for settlement
- Differing conventions for different security classes (equities, bonds, derivatives)
- CPSS-IOSCO Technical Committee Recommendations for Securities Settlement Systems
- Delivery versus Payment Interaction between payments and securities settlement systems
- What is a ‘nominee’
- Key nominee activities
- Announcements & communications
- Entitlement actions
- Large Value Transfer systems (LVTS) including Real Time Gross Settlement (RTGS) systems
- International payments - concepts, procedures and settlements
- CLS (Continuous Linked Settlement)
- Pre-settlement (including; input of settlement instructions, input scenarios, matching, monitoring transactions, changing transaction input, shaping deliveries, splits).
- Settlement (priorities and queues, circle processing, monitoring transaction, settlement, electronic transfer of title (ETT), bad deliveries)
- The importance of securities timing
- Overcoming problem areas
- Cash management and Foreign Exchange - timing and importance
- Settlement for residual securities
- Derivatives settlement
- The reconciliation process and its importance
- Herstatt risk - a brief introduction into foreign exchange risks
- Differing settlement methods for foreign exchange settlements.
- Continuous Linked Settlement.
- Why CLS is relevant for securities settlements.
- PvP Requirements of overlapping national RTGS systems.
- CLS & correspondent banking.
- Current CLS statistics
- Who are the users and the providers?
- Basic structure for custody services
- The role of the derivatives clearing broker
- Sub Custodian
- Life cycle of a trade - the linked phases of processing
- Trade settlement
- Market practice: cut-off and value dates
- The services a global custodian and derivative clearer offer its clients - settlement, safekeeping of securities, income collection, corporate actions management, cash management, funding, tax management, reporting - the information chain e.g. SWIFT, banking facilities
- How custody services work
- Central Securities Depositories (CSDs)
- International Central Securities Depositories (ICSDs)
- Paper trail from actual transactions to actual deposit of securities with custodians
- Differences between Domestic & International CSDs
- Investment accounting
- Master custody/master recordkeeping
- Securities lending, equity repos and collaterals
- Trustee services
- Portfolio valuation
- Collateral management
- Describing how securities lending operates in simple terms.
- Country-specific depositories in Hong Kong, India, Indonesia, the Philippines and elsewhere
- What has driven the need for T+2?
- What are the T+2 benefits?
- The Target T2S migration
- How T+2 impacts clients transactions
- The scope of T+2 in T2S
- What is not in scope
- The impacts of Target 2 Securities
- Derivatives and T+2
- What are “corporate actions” and why do they occur?
- Common types of corporate actions and examples
- The growing importance of proxy voting
- Importance of timing
- Communicating Corporate Actions
- Managing Corporate Actions Risk
- Credit, Replacement cost, Principal, Delivery versus Payment, Liquidity, Settlement, Custody, Operational, Legal and Systemic risks
- In securities clearing, settlement & custody: Settlement, Operational, Financial, Market, Loss of title, Insolvency, Payment, Failed Trades, Cross border operations
- In payment systems: Settlement, Operating, Payment Finality, Liquidity, Systemic, Zero hour bankruptcy rule
- Specific risks relating to custodians - examples of what can go wrong
- IOSCO and technology risk concerns
- Lack of appropriate market surveillance tools
- Risk created by automation
- Identified industry issues
- IOSCO April 2013 Report
- Legal environment
- Key legal issues
- MiFID Explained
- How Trading Split Across Exchanges
- Unintended Consequences of MiFID
- Emergence of MiFID 2
- Dark Pools
- Dark Pools Under MiFID 2
- Automated Trading
Richard’s professional experience spans over 25 years. He started his career with Wells Fargo Bank, following by Fundtech and then moving to international advisory and consulting for the private and high-tech sectors providing high-level consulting, business analysis, project management and training to a wide range of banking clientele across the globe.
Over his career Richard was involved in International Trade Finance, Cross Border Payments and Settlements, Operational Risk, AML and Corporate Governance amongst others.
He has spent extensive time servicing a diversity of financial institutional clients in many countries including: UK, Ireland, China, Singapore, Hong Kong, Philippines, Korea, Malawi, Ghana, Nigeria, Kenya, South Africa, Poland, Sweden, Netherlands, Greece, Norway, Bermuda and across North America.
Clients that Richard has trained & consulted to include: JP Morgan, Abu Dhabi Commercial Bank, Qatar Exchange, Abu Dhabi Investment Authority, Central Bank of Egypt, Irish Gas, UBS, Central Bank of Ireland, Central Bank of Norway, Merrill Lynch, PGGM, BP, Asian Development Bank, African Development Bank, Instinet, Fundtech, European Central Bank, Brunei Investment Agency, British Steel Pension Fund, Salesforce and Tullet Prebon amongst others.
Who Should Attend
Professionals from Custodial and Investment Banks, Exchanges, Hedge Funds, Pension Funds and Endowments and other institutional investors from the following departments:
- Custody Services
- Transactions & Processing
- Risk Management
- Credit Risk
- Customer Relationship