Commodities Pricing & Trade Risk Management

Transcription

1 BRICSA EVENTS 3 Day Master Class Commodities Pricing & Trade Risk Management Dates: September 2017 Venue: Radisson Blu Residence Dubai Marina, UAE A thorough overview of all aspects of commodity derivative instruments used to manage price risk in physical, financing and investment contracts A commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing. Karl Marx

2 ABOUT COURSE INSTRUCTOR OVERVIEW Judith Ganes Course Facilitator Judith Ganes has over 30 years of experience in commodities with a focus on softs (sugar, coffee, cocoa, cotton, and FCOJ) with 18 years working for major Wall Street firms as fundamental analyst serving institutional clients throughout the entire supply chain as well as speculators/funds. She currently runs her own consulting firm; publishing subscription based research reports and offering advisory services & educational seminars on price risk management, futures and options. This 3-days intensive workshop lays out the main features of commodity markets and focuses on the techniques available in the paper markets for managing commodity price risks. Some discussion on physical markets is included to provide the context for certain characteristics of the financial markets. The programme balances lectures with real life case studies, plus attendees participate in hands-on workshops sessions to tease out the subtler aspects of working in the commodity space. Course participants will gain a practical toolkit for dealing with the rapidly evolving world of commodity products. This comprehensive course takes participants through the main commodity sectors, and illustrates how price risk arises and can be managed. By the end of this course, participants will be able to identify selling opportunities within the bank s existing customer base, structure and implement appropriate derivative solutions, and understand the measures and controls that will help the bank run a commodity business. It is especially geared to bankers and institutions in emerging markets, where commodities are often vital to the local economy and domestic banks lag the large international commodity players. The Course Instructor has extensive experience in all aspects of commodity derivatives theory and practice, and the course is enlivened with a set of rich case studies and intensive group work exercises. WHO SHOULD ATTEND? This course is aimed at client-facing bankers, support staff, credit analysts and auditors involved with commodity transactions. If you are asking yourself any of the following questions, then this workshop is for you: Why are commodities considered a difficult asset class? Do I have to take or make delivery of physical if I offer commodity price management solutions? Why do I need to know what is happening in physical markets and how can I follow them? My customers seem to speak a different language when discussing commodities. How can I understand the risks they are describing and deliver bank products to address these risks? Some commodities seem to be easier to deal with than others. How can I distinguish those that can be readily dealt with from those that would leave the bank with unappealing risk exposures? Can I reduce risk in the lending portfolio by protecting the value of commodity collateral? And can our bank deliver that hedging rather than outsourcing the risk management to an international player? How can I price, structure and manage commodity derivative strategies? Why do commodity investment flows matter?

3 OUTLINE & AGENDA Day One Day Two Introduction to the Markets and the Need for Exchanged Traded Futures The futures contract standardized and tradable - The market participants and their role allowing risk transfer - The role of exchanges and clearing houses - Clearing house manages risk - Margin system - Hedgers - Speculators - Brokers - New York and London Exchange Contracts - Contract Specifications for sugar, coffee, and oil - Regulatory Environment Trade Flows - Order flow - The impact of funds (speculators) - The commercials (hedgers) - The macro-economic environment. - The impact of Investor sentiment - risk on/risk off Commodity price - Currencies US dollar index, USD/ BRL Understanding Market Structure - Spreads and the forward curve - Contango/Carry structure - Backwardation/Inverse structure - Producers Marketing Plan / Consumers Purchase Plan allocation of tonnage against each futures month to maximize value - Substitution and omnibus contracts to maximize value - Rolling - The Basis (Physical premiums/discounts) - Freight The freight market and freight differentials - Other factors: quality, on time delivery - Price risk management with commodity futures - Buying and selling commodities Cash/physical market, Forward, Futures, Options - Hedging with commodity futures - Risk transfer - - Fair Value of futures contract - Convergence of futures and cash at expiry - Arbitrage between futures price and fair value - Basis risk Fundamentals VS Technical Trading - Distinguishing between the two concepts as it relates to trading - Defining risk parameters Overview of Market Fundamental Indicators for Benchmarking - Production and consumption trends - The current trading environment - Long term VS Short term Mechanics of Trading Futures - Opening and closing a futures position - Delivery or cash settlement - Offset or reversing trade - Exchange For Physical (EFP) - Types of Orders and Defining Risk - Futures Spreads - Volume, Open Interest Introduction to Options - Calls and Puts - Buy and Selling - Risk Parameters Compared to Futures - Basic Strategies Review - How does all of the above effect ones approach to the market and your strategy? Practical Activity - developing market analysis into a risk management approach and execution of strategy OBJECTIVES Participants will come away from this workshop with: A solid grounding in the principal commodity sectors, and the relevant terminology A practical knowledge of the unique features of the commodity derivative markets for each sector A sound understanding of derivative structures and their applications A detailed insight into how to de-risk commodity lending transactions, and an informed ability to determine the credit risks relating to different types of structures An appreciation of the suite of products available to investors and the relevance of investment flows to the physical market Lessons learned from others mistakes The confidence and knowledge to question and challenge subject matter experts

4 OUTLINE & AGENDA Day Three Understanding Option Benefits and Risks - Option Concepts - Key concepts involving the use of puts and calls - Key considerations in determining the pricing of puts and calls - Volatility calculations: What is the significance of historic and implied volatility? - How options fit with your trade strategy Practical Strategies for Using Puts and Calls in Sugar trade - Long Only - Spreads, Straddles, Credit and Debit Spreads - Synthetics - Basic and Intermediate Option strategies for producers and consumers (collars, three ways, etc) - Calendar Spread Options - What to be wary of (no free lunch) Managing the Futures Spread (roll) - Approach in a carry market (producer/consumer) - Approach in an inverted market (producer/consumer) More on Options (Delta, Gamma, Theta and Vega) - What are the Greeks? - The basics of Managing Option Strategies - What option structures have a more practical application Monitoring Strategies keeping an eye on your exposures - Management of a hedge position - Marking to Market - Reporting Worked hedging examples Producer User - Speculator - Rising market - Falling market ABOUT BRICSA EVENTS BRICSA EVENTS mission is to provide market driven and content rich training to banks and bankers in Emerging Markets, to the same standard as would be expected in developed markets. From our regional office we have served clients in more than 30 countries in Asia, Africa and the Middle East. Our clients include banks and other financial institutions, governments, and economic development agencies and institutions. Through our training programmes we share the experience and knowledge of our experts with bankers in Emerging Markets, supported by high quality materials and taking advantage of the latest technologies. Our courses are all highly interactive, and make use of carefully designed case studies and simulations. We offer a range of training topics for banks and financial institutions including: Strategy & Management Formulating, Implementing & Monitoring Strategy Risk Management Credit, Market & Operational Risk Human Resources Management SME Banking Customer Relationship Management; Credit Risk Management Retail Banking Customer Relationship Management, Distribution Strategy, Product Management, Credit Risk Corporate Banking Customer Relationship Management, Credit Risk Management Governance, Regulation & Compliance Financial Markets For more information, visit our website at: To discuss your specific requirements us at: marketing@bricsaevents.in This program can be run as In-house at your desire location. Summary and Key Take-Away Points

5 Course Duration - 3 Days Sales Contract Please write in BLOCK letters DELEGATE DETAILS COMPANY DETAILS Company Address: City: Tel: Country: AUTHORISATION Name Position Date Signature* : : : : / / COURSE FEE: Course fee will cover training materials, luncheon and refreshments for the respective training days. This course is non-residential hence participants need to take care of the accommodation and logistics separately. For accommodation you may contact us to get a special rate at the venue. I/we hereby confirm to the above and authorise our participants. * This booking is invalid without signature. BOOK EARLY SAVE US$ 400 Early Bird Discounts Register before June 30, US$2790 Register before July 31, US$2990 Final Price....US$3190 Group Discounts* 3-4 Delegates 10% 5 Delegates 15% *please note that all group discounts are given on the final price Easy ways to Register TERMS & CONDITIONS 100% payment of the full amount upon receipt of the invoice. All cancellations must be done in writing. Full refund for cancellations will only be paid to a maximum of one week from the invoice date. 50% refund for cancellations will only be paid to a maximum of two weeks from the invoice date. No refund for cancellations done after 2 weeks from the invoice date. Substitute is always welcomed; if not possible a credit note will be given which can be used for any of Bricsa Events up to 1 year. Force Majeure/indemnity: If the event is postponed, canceled or abandoned by reason of war, fire, storm, explosion, national emergency, labor dispute, strike, lock-out, civil, disturbance, actual or threatened violence by any terrorist group, or any other cause not within the control of our organization, we shall be under no liability to Company for non-performance or delay in performance of obligations under this contract or otherwise in respect of any actions, claims, losses (including consequential losses) costs or expenses whatsoever which may be brought against or suffered or incurred by Company, as the result of the happening of any such events. Complaint and Refund: For more information regarding administrative policies such as complaint and refund, please contact us at: Tel: , Fax: , marketing@bricsaevents.in Governing Law: This contract shall be governed by and construed in accordance with the Laws and Regulations of India and the High Court of Bombay shall have exclusive jurisdiction without regard to conflict of law provisions.