2. Agenda
What's the agenda?
Flexible agenda to met the delegates’ requirements.
Evening times:
6pm –10am ( 4 hours with coffee breaks)
Weekend and weekday times:
Start at 9am to 5pm with breaks and lunch
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3. House Rules!
Lavatories
Food and Drink in the class room
Drinks –water from the kitchen area
Fire Alarm
Room Access during lunch and breaks
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4. Pre-requisites
•Your laptop and permissions to install software
•Windows machine for installation of the client software , ftp clients and other useful tools
•Pen and notepad for taking notes
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3 mins
5. Fast Paced course?
Lots to go through
We only have a limited time so the pace is going to be fast
The workshop will introduce you to the Capital markets domain from the Quality assurance and testing perspective.
We will introduce you to Asymilate’sCapital Markets Testing tool : Caesar
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6. About me –MiteshSoni
Over 20 years in the Capital Markets Banking Domain
Has worked for major investment banks as a principal consultant
Specialises in Capital Markets Quality assurance and Testing solutions.
Managing Director of AsymilateLimited
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7. About me! –Viresh Doshi
Over 15 years testing experience
Extensively worked in the Internet domain
Technical testing specialist
Process Improvements Advocate
Automation testing advocate
Keen follower of Agile and it’s techniques
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8. What do you want to get out of the course?
Note down your goalsand objectivesone per sticky note and describe them.
Note down any questionsyou have that you would like answered.
One per sticky note
Lets review them at the end of the course.
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10 mins
9. What do you already know about the capital markets domain?
Lets talk and note down what we already know.
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5 mins
10. Capital Markets Testing overview
The workshop will be delivered in a classroom lecture style.
We will use a popular Capital Markets Application to describe the domain and concepts for testing and QA
We will also refer back to Caesar application which is a test harness built to perform regression testing for Capital Markets.
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11. Course Overview
The 2 day Capital Markets Testing workshop is split into three categories:
1.Banking Domain
2.Technical Skills
3.Testing skills
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12. Course Overview –Banking Domain
Capital Markets -what is capital markets in the investment banking arena?
Learn about investment banking trading
Learn the different banking products (ADR
1.Equities
2.Repos
3.Swaps
4.Bonds
5.Derivatives
Learn the workflow -Trade, Transfer, Message
Learn about SWIFT messages
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Learn STP –straight through processing
Risk and Reporting -EOD
Learn about these objects(trades, transfers, messages, tasks, legal entities, tasks, legal entities)
Learn about static data
Learn about netting
Learn about SDI
Learn about rejected trades and resolution
Learn about Front office, Middle office and Back office
13. Course Overview –Technical Skills
Unix and linuxfor running jobs and viewing log files and starting and stopping
Telnet and FTP for test data manipulation
XML files manipulation
Basic of SQL for test data preparation
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14. Course Overview –Testing Skills
Popular test variations for Test data Prep
Functional testing and Regression testing test plans and test cases creation
Performance Testing planning and simulation
Test Environments and development environment.
Problems and Defect finding and resolution
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19. Areas covered
Domestic Banking
Investment Banking –Capital Markets
Trading and Speculation
Hedging
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20. Chocolate –Cadburys Example
Chocolate is made in the UK
Raw material –Coco Beans are needed from South America
Instead of buying chocolate at a fluctuating price, Cadburys will enter into the derivatives market for a product that will fix the price for additional fee(s).
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21. Nick Leeson–Barings Example
Investment bank is brought down due to a rogue trader who confirmed his own trades.
Large futures trades sensitive to changes in price of underlying asset led to big losses
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22. Quality Gates
Four Eyes Principle –supervisory checks to maintain audit trail
Kyc–Know your customer
Dodd Frank –OTC markets being forced to go through regulated exchanges to prevent big losses.
Basel committee recommendations
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23. Lehman Brothers example
Investment bank collapses.
Credit Defaults triggered large payoutsthat the bank could not guarantee
Counterparties exposed to Leemanstriggering systemic risk
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24. Topics
Settlement t+2 for FX (exceptions CAD)
CLS –continuous link settlement – organisation that facilitates FX settlement and reduces settlement risk
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25. Topics
Quantitiveeasing –effects on exchange rates
Static Data –reference data
Reuters/Bloomberg for pricing
SWIFT –confirmations gateway MT/MX
Trading book –hierarchy of trade activity
Netting –aggregate settlement
Matching Confirmations Process
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26. Terminology
Nostro–our account, at our agent
Vostro –cpty’saccount with agent
Loro–cpty’saccount held with our organisation who is an agent
STP –Straight Through Processing
Netting –an agreement to aggregate the transactions for net settlement www.time2test.co.uk 26
27. Quiz
What is the difference between Front Office and Back office?
How would you describe Middle Office?
What products are traded in Capital Markets?
What typical attributes make up a SWIFT message?
What is benefit of netting?
What are Chinese walls at Investment banks?
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28. Quiz
What does it mean to Settle a trade?
What is a confirmation?
What is a counterparty?
Can you give some examples of static data?
What is STP?
What in terms of financial reporting is the main difference between a derivative and an equity?
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29. Quick recap of topics covered in the session
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30. Trade Lifecycle
Happy Day workflow scenario
Rainy Day scenario
Counterparty becomes insolvent
Incorrect Static Data propagation
Rate tolerances breached
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Many considerations for Test Scenarios
31. Cashflowand security movement
All transactions have movement of cash and / or security
Cashflowsare basic building block for valuation purposes
Discounted Cashflowsused to compute net present value
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32. Delivery Concepts
Deliver Against Payment (DAP) – Security and cash exchanged simultaneously
Delivery Free of Payment (DFP) – Security and Cash are exchanged independently(carries more risk)
Contingent accounting –used to build up general ledger to represent the trade as it is confirmed and settled
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33. Bond Example
Bonds entitle buyer to interest payments according to the bond definition
Bonds are issued by governments and corporations to raised debt
ISIN –unique number to identify the Bond
Coupon –term to denote the interest payable
Value of the bond is inversely proportional to interest rates.
Yield curves are used to create net present value computations
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34. IRS –Interest Rate swap
Two parties in a transaction where one party pays fixed rate of interest and the other pays floating rate.
Used by companies to hedge against interest rate movements
Or to raise capital by companies who are lower credit grade clients
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35. OTC –over the counter
OTC –over the counter products allow the counterparties to agree flexible terms and conditions
Exchange traded –product conditions are determined by the exchange
CCP –Central Counter Party –Rapidly becoming the new infrastructure for settlement.
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36. Forward Products
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Forwards are products where the price and conditions are agreed today for a future settlement
Used for hedging purposes to avoid fluctuations of rates and prices
Also can be used speculatively for trading purposes
37. Repo Products
Repurchase Agreements – Agreements where on counterparty lends the other a sum of money which is backed by collateral from the other counterparty
Used frequently for Short Term financing by large investment banks
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38. Buy/Sell Back Products
Repurchase Agreements
Short Term financing
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39. Option Basics
The right but not the obligation to buy or sell an asset at a given strike price and date schedule.
European –one fixed exercise date
American –can be exercised on any date to expiry
Bermuden–a schedule of expiry dates
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40. Terminology
Arbitrage –small differences in rates that allow you to simultaneously buy and sell an asset to capitalise on the rate difference.
Short selling –selling an asset even though you may not own the asset by taking a speculative view on where the market is heading.
Novation –transfer of ownership
LIBOR –Committee that sets the interest rates
ISDA agreement –legal framework for trade confirmation and settlement
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41. Terminology
Equity option –put / call
Exercised options -American , Bermudian, European
Swaption–the option to exchange fixed for floating in a swap trade
Asset swap –exchange the income stream from an asset pool to a cash income stream
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43. Goals and Objectives
Review the Sticky notes
Did the course meet your goals and objectives?
Feedback will be requested via email.
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44. Recommend us?
Recommend your friends and earn some incentives:
iPad
Kindle
Android Tablet
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