CS1414 FINANCIAL DOMAIN
Unit 1: (2 Hrs) - Overview of the course
• Get an overview of the financial domains and understand the basic
• Understand the functioning of various types of financial institutions –
investment banks, brokerage houses, commercial banks, Insurance
companies and employee benefit companies.
• Understand the services they offer and the functions they perform
• Who are the end users of those services?
• SunGard solutions related with the services and the functions
• Understand the relationship among the different types of financial
Unit 2: (5 Hrs) – Introduction to Financial Markets
Capital Markets: (1 Hr)
• Financial Markets Introduction -
o Capital Market
o Commodity Market
o Money Market
o Derivative Market
o Currency Market
o Insurance Market
• Company and it's Capital needs (New business, expansion,
modernization) , Ways to raise capital and Need for capital market
• Role of capital markets
o Capital Market Participants - Government, Banks, Corporations
o Role – Raise long term funds, Provide a platform for trading
o Division of Capital Market - Equity, Debt Market
• Entities – exchanges, brokers, ECNs
o Exchange, it's functions – price discovery, liquidity, risk transfer
o Brokers, Client interaction, Need for broker-client system
o ECN definition, diff between Exchange and ECN,
advantage/disadvantage over exchange, changing scenarios &
success of European MTFs
• Different types of financial instruments and their markets
o Need for different instrument types
o Various Instrument Types : Equity, Debt, MM,FX, Derivatives
(Futures & Options)
o Non-standard instruments : OTC instruments
• Primary vs. secondary markets
o Primary and Secondary Market comparison
o Participants and their functions
Derivative Market: (2 Hrs)
o Derivatives & their need
o Forwards contracts, Futures & Options
o Difference between Futures & Forward contract
• Types of Derivatives (Brief Introduction)
o Stock Derivatives
o Index Derivatives
o Debt Derivatives
o Commodity Derivatives
o Currency Derivatives
o Weather Derivatives
o Interest rate Derivatives
• Participant of Derivative Market
• Futures & Options
o Futures & Options comaprison
o Option Types : Call/Put, American/European
o Payoff for Futures
o Payoff for Options
o Application of Futures and Options
Commodities Markets: (2 Hrs)
o Define Commodity / Commodity market.
o Various products traded in commodity market.
o History / Evolution of commodity market:
o Major commodity exchanges in globe.
Some statistics related to volume traded / size of market.
Regulation of commodity markets.
o Major commodity exchanges in India.
Products traded in Indian market
Size of Indian Market
• Commodity Derivatives: Participants, Contract specifications and
o Different types of participants of commodity market:
Hedging: Practical examples.
Volatility of markets: Importance of hedging.
Role of commodity markets: Price discovery
Speculation: Portfolio Management, Diversification of asset
o Common Commodity Derivatives traded & Contract specifications:
Options/Asian Option/Spread Option
o Pricing of commodities:
Granularity of Forward Curve
Seasonality factor of commodities.
Determination of Futures Price.
The Cost-of-Carry model
Hybrid model (i.e. Cost-of-Carry & future supply and demand)
• Commodity Contract Specifications and Life Cycle:
o Life cycle of commodity contract:
o Listed contract Vs OTC contracts
Role of clearing house
Clearing of OTC trades
Margining: Margin calculation
o Valuation of trades:
Mark to Market:
o Exercise & Settlement:
Cash settlement Vs Physical settlement.
Ware house receipts.
o What happens next in Commodity markets?
o Latest development:
o Evolution, trends & Observations:
o Recent Economy Melt down & Fed policies.
Unit 3: (8 Hrs) – Investment Banks and services offered
Investment Banks: (1 Hr)
• What is investment bank?
• Evolution of investment banks
o 19th century trading world, Need for Investment Bankers,
o History of Investment Banking/Morgan House
o Current Investment bank structure – Front Office, Middle Office,
• Brief overview of services offered in Front Office
o Investment Banking – Underwriting, M&A advice, corporate
finance, private equity
o Investment Management - Institutional Asset & Private Wealth
o Derivative Structuring
• Brief overview of services offered in Middle Office
o Risk Management : Analysis of Credit and Market Risk
o Finance : Capital Management
o Compliance: Government regulation
• Brief overview of services offered in Back Office
o Operations – Analysis of trade data
• Regulatory framework for Investment Banks
o Need for Regulatory Framework – Market crisis, Financial Crime
o Regulatory Entities Goals – market confidence, public awareness,
investor protection, reduction in financial crimes.
o Regulatory Entities and their functions.
o Geographical difference in regulation.
Services offered by an Investment Bank:
Investment Banking: (2 Hrs)
• Raising capital in the primary markets
o Methods of issuing securities – IPO, Rights Issue, Preferential
o Investment banks role – Underwriter, Need for Underwriting and
Underwriting Process flow
• Advise on M&A
o Merger & Acquisition, comparison, types
o M&A activities – Business valuation, Financing M&A, taxation,
Negotiating with merger target
o Need for investment bank for M&A
• Corporate Finance
o Actual Corporate Finance & Activities - Investing Decision,
Financing Decision, Dividend decision
o Investment Banking - Corporate Finance Goals – max corporate
value, manage corporate risk
o Role of Investment banker – Evaluate companies financial needs,
Raise appropriate capital for those needs (equity-debt ratio, DCF,
• Private equity
o Concept private equity,
o Types of Private Equity & Investment banks: LBO, Venture
Capital, Growth Capital, Distressed investments.
• Institutional Asset Management (3 Hrs)
Overview of Mutual Fund.
MF Structure & Regulation
How Fund Start Up?
How People put Money In?
The Advisor manages the portfolio.
How MF makes money?
How NAV is calculated?
People take money out.
Risk in types of Fund.
Introduction to Hedge fund/Unit Trust.
Private Wealth Management: (2 Hrs)
o Entities involved in private wealth management
o Institution serving private clients
o Service Delivery Platforms
Discretionary portfolio management
Non Discretionary Portfolio Management
Advisory Portfolio Management
o The wealth life cycle
o Components of private wealth management
Analyzing clients Investment objectives and time horizons
Financial planning and goal setting
Investment Recommendation and Plan Execution
Performance monitoring and portfolio rebalancing
Unit 4: (5 Hrs) – Services offered by a Brokerage House:
Sales & Trading: (2 Hrs)
• Trading life cycle
• Retail/Institutional trading
• Principal trading – position building/P&L
• Orders – Different types of orders
• Order processing, Order book and order execution
• Quotes processing
• Important terminologies and concepts
- Clearing and settlement: (2 Hrs)
• Trade flow (equity) refresher
• Clearing and settlement purpose
• BIS (Bank for International Settlement) settlement models
• Basic clearance and settlement services
• Functional model
• Introduce various entities involved in clearing and settlement
• Describe a typical clearing and settlement cycle
• Explain functions performed by various entities involved in a clearance
and settlement cycle
Unit 5: (4 Hrs): Retail Banking
•basic purpose of commercial banks(what do they serve)
•basic functions in a commercial bank
•Concept of asset & liabilities
•Inter bank settlements
o Clearing & collection
o Intra & Inter bank - DD, PO, Cheques, TCs, Electronic payments
•Fee based functions
o TF, Payment services, exchange operations...
•How banks make money.
Unit 6: (3 Hrs): Insurance
• Global Market Overview of Insurance Segment
• Risk Management & Insurance
o Types of Risk
o Insurable Risk
o Risk Management
• Principles of Insurance
o Utmost Good Faith
o Insurable Interest
o Proximate Cause
• Insurance Value Chain
o Sales and Marketing
Agents and Brokers
Responsibilities of Agents to Insurers
Responsibilities of Agents to Insureds
Authority of Agents
Other Marketing Channels
Claim Handling Responsibility
Claim Handling Process
o Insurance financials
Monitoring Insurer Financial Performance
Non Proportional Reinsurance
• Introduction to Life & Health Insurance
o Life Insurance
o Health Insurance
• Introduction to Property & Casualty Insurance
o Property Insurance
Property Loss Exposures
Property Insurance Policy Provisions
o Casualty/Liability Insurance
Exlements of Liability Loss Exposures
Categories of Liability Loss Exposures
Liability Insurance Policy Provisions
• Information Technology in Insurance Industry
o Product Development
o Product Distribution
o New Business & Policy Administration
o Claims Processing
Unit 7: (2 Hrs): Benefit Administration
• Overview of Retirement Planning
• Plans and Participation
• Loans and Withdrawals
• Compliance Overview
Unit 8: (3 Hrs): Corporate Treasury
• Treasury Objectives
• Payables and Receivables
• Cash Management
• Treasury Accounting
• Treasury Dealing
• Risk Management
• Back Office Operations
• Overview of Financial Statements
• Glossary Terms
• Income Statement
• The Balance Sheet
• Cash Flow Statements
Unit 9: (6 Hrs): Risk Management and Compliance
Risk Management: (3 Hrs)
• Basics of Risk Management
o What is risk?
o Risk management objectives
• Risk Management – Financial Institutions
o Different types of risks:
Asset Liability Management Risk
o What is VaR. Approaches to compute VaR.
o Risk Mitigation Techniques
Compliance: (3 Hrs)
• Compliance Objectives
• Compliance examples
o BaselI & II compliance
* SOX compliance
o NBFC compliance
o Trading FO/BO compliance
o MIFid/RegNMS compliance
• AML – Financial Fraud detection and Alert System.