Cash and Market Liquidity Management in Banks and Financial Institutions

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1 INSTITUTE OF BANKING STUDIES < < IN COOPERATION WITH SIGMA ASSOCIATES / UK INVITES YOU TO PARTICIPATE IN THE PROFESSIONAL BANKING SEMINAR ENTITLED Cash and Market Liquidity Management in Banks and Financial Institutions TO BE HELD AT THE INSTITUTE OF BANKING STUDIES/ Amman Nov. 4-8, 2012

2 < < Cash and Market Liquidity Management in Banks and Financial Institutions Objectives - Provide participants with a full awareness of BIS guidance of the management of bank liquidity. - Acquaint participants with the techniques for the management of both cash and market liquidity, and the current crisis in liquidity management. -Enhance participants skills to explore new ideas in innovative liquidity management. Main Contents - Policy issues surrounding the management of liquidity. - Cash and market liquidity risks. - Ongoing liquidity management. - Foreign currency liquidity management. - Internal controls for liquidity risk management. - Technical issues surrounding the management of liquidity. - Measuring liquidity risk. - Managing cash flow gaps (liquidity applications and sources). - Using Forex markets for cash liquidity management. - Using capital markets, debt issuance, equity and securitization. - Innovative schemes for improving cash and market liquidity. - Crises management in the current climate. - Case Studies. Participants - Middle and senior bank management requiring a comprehensive knowledge of the global requirements of the banking industry under BIS guidance for the management of cash and market liquidity risk. Note: - All participants must have a sound knowledge of money and spot and forward foreign exchange. Good numeracy skills will also be assumed. Seminar Language : English Place: Institute of Banking Studies Duration: Five Days Date: Nov. 4-8, 2012

3 " Cash and Market Liquidity Management in Banks and Financial Institutions " Nov. 4-8, 2012 Detailed Contents: First Day : Policy Issues Surrounding the Management of Liquidity The Nature of Liquidity Risk Cash Liquidity Risk - Cash liquidity, as a primary risk. - Secondary risk consequences: - Distressed borrowing, poor asset creation, interest rate exposure. - Damage to business strategy and profitability and increased capital risk. - Primary and secondary effects of too little monetary liquidity on the business. - Causes of cash liquidity shortages. - Conservatism and the effect on earnings and profitability of maintaining excessive monetary liquidity. Market Liquidity Risk - Traditional inability to trade in or out of a risk situation, asset or liability. - Effects on pricing and innovation of shortages of market liquidity. - Causes of deteriorating market liquidity: - Lack of volume, innovation, engineered structuring, complex and new products. - Lack of industry cooperation and secrecy. - Effects on spreads and profits in market making. - Effects of excessive market liquidity / competition on spreads and profitability, on asset creation and the loss of liabilities. - Cash liquidity-market liquidity in tandem- the terminal combination. - Crisis management and the need for contingency plans. - Principles for the assessment of liquidity management in banking organizations. Seminar Timing 9:00-17:00 Break Times: Break (1) 11:00-11:15 Break (2) 13:00-13:30 Break (3) 15:00-15:15 Second Day : Ongoing Liquidity Management - Developing a structure for managing liquidity risk. - Measuring and monitoring net funding requirements: - Assets.

4 - Liabilities. - Off-balance-sheet activities. - Other assumptions. - Managing market access. - Contingency planning: - Strategy. - Back-up liquidity. - Asset securitization programs. Foreign Currency Liquidity Management - Funding domestic currency assets with foreign currency. - Funding foreign currency assets. Internal Controls for Liquidity Risk Management Technical Issues Surrounding the Management of Liquidity Measuring Liquidity Risk - Information gathering and sources of information. - Importance of information quality, effects of poor quality on hedging and management systems. - Timing in cash liquidity and the effects of lack of timeliness. - Cash-flow forecasting schemes and statistical mechanisms. - Gap analysis, choice of gap, periodic positive / negative gapping, funding gaps. - Secondary and tertiary purposes of gapping information. - The need for systems coordination. Seminar Timing 9:00-17:00 Break Times: Break (1) 11:00-11:15 Break (2) 13:00-13:30 Break (3) 15:00-15:15 Third Day : Managing Cash Flow Gaps- Applications and Sources for Cash Applications for Liquidity - Creation of outflows, asset creation. - Other areas requiring a commitment to liquidity provision. - Non-core-business liquidity provision. Sources of Liquidity (Internal and External - Running down assets, consequences for profitability and risk. - Moving away from core deposits, money market instruments, short-term borrowings, pricing and quoting: - Time deposits, using tradable securities to advantage, collateralized systems, using short term bonds. - Consequential costs and effects on cost of capital. - Contingent and other business mechanisms for conserving cash liquidity- problems surrounding wholesale funding. Using Forex Markets for Cash Liquidity Management - Understanding FX swaps, matched and MIS-matched, pricing and quoting in short and forward dates: - Short date liquidity management, quoting and pricing.

5 - Using for internal and external funding and investment. - Consequential savings. Fourth Day : Using Capital Markets, Debt Issuance, Equity and Securitization - Consequences, effect on costs. - Using derivatives, upside/downside effects on liquidity. - Trade off between cash and market liquidity. Innovative schemes for improving cash and market liquidity - Retail Deposit Mechanisms: - Guaranteed market bonds. - Guaranteed FX returns. - Guaranteed money market funds. - Professional mechanisms: - Acceptances. - Guarantees. - Asset swaps, swapped asset backed securities. - Credit derivatives as a means of buying cashless credit risk. Seminar Timing 9:00-17:00 Break Times: Break (1) 11:00-11:15 Break (2) 13:00-13:30 Break (3) 15:00-15:15 Fifth Day : - Improving market liquidity by proxy trading and hedging in dollar linked currencies (especially the Jordanian dinar): - The recent performance of the JOD-volatility issues. - Correlation issues in exchange and interest rates. - Creating JD-linked financial products, including derivatives. Crises Management in the Current Climate - Understanding the origins and effects of the current liquidity climate - The risk has been given too low a priority - The situation is not new - It will occur again - It has never been and will not be remedied - The need for action not deferral Needs - Contingency planning - Back-up lines of credit - The need for periodic testing of credit lines and stress testing - Your credit risk or their liquidity risk? The Role of Public Disclosure in Crisis Management - Managing liquidity under crisis - The role of the press and media - Keeping liability holders on-board The Extreme Solution - The role of the Supervisor, the Central Bank and the State - Quantitative easing principles - Public ownership

6 CURRICULUM VITAE Peter Cartledge Peter Cartledge : An independent consultant with over 30 years in the business, he started his career in international banking in 1970 in Settlement, International Trade Finance and Letters of Credit. He traded spot and forward foreign exchange and money market products for several years before becoming involved in the training environment. After a period full time training in 1983, he returned to the markets in 1985 as derivative products started to develop and was closely involved in consulting with clients at Midland Montagu Investment Bank, (now HSBC). Because of his extremely wide experience and detailed cross - markets knowledge, as senior Manager, Treasury Skills Consultancy he was responsible for advising and training front-office corporate and bank staff, in all aspects of treasury and capital markets, fixed income, derivatives and risk management. He also worked in new financial product development, and corporate financial engineering and treasury consultancy. In 1990 he founded Sigma Associates an independent consultancy and training partnership and since becoming a freelance trainers, has delivered some 60 different programmes in over 33 different countries in North America, Europe, Africa, The Middle East and South East Asia. He has published the following : Spot Currency Dealing, (Foreign Exchange Manual) Woodhead Faulkner 1991 A Handbook of Financial Mathematics Euromoney Books 1991 Financial Arithmetic-A Practitioner's Guide Euromoney Books 1993 (Formerly recommended reading for membership and fellowship examinations with the A.C. I. and the Forex Diploma) Market Calculations Bond Markets Financial Times-Pitman 1998 Market Calculations Interest Rates Financial Times-Pitman 1998 Handbook of Financial Mathematics Vol I Euromoney Books 2000 ( Money and Bonds) Handbook of Financial Mathematics Vol II Euromoney Books 2001 ( Financial Derivatives) - Member of The Global Association of Risk Professionals (GARP) - Member of The International Association of Financial Engineers (IAFE) - Member of the UK Institute of Directors (IOD) - He has also been active in the UK Association of Corporate Treasurers, as an exam setter. - FSA.

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