Securities Settlement and Global Custody

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Brett Shaw
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1 Securities Settlement and Global Custody A 3 days course This course can be presented in-house for you on a date of your choosing The Banking and Corporate Finance Training Specialist

2 Quizzes, case studies and exercise are used though out to aid learning. Course Content OTC v Exchange Course Traded Overview Securities The Settlement Cycle Trade Capture / Matching / Settlement / Reconciliation Rolling Settlement (T+3) v Account Day Replacement Risk Central Securities Depositories (CSDs) DvP and DFoP RTGS v Netting International CSDs Euroclear and Clearstream Their Role in the Market Place RTGS (Real Time Gross Settlement) Local CSDs Crest Settlement in Central Bank Money Multilateral Netting DTC and Federal Reserve in the USA Local CSDs Reconciliation Double Entry Book Keeping Depo and Cash Accounts Breaks Case Study / Recognising a break and what to do next! Overview of the Life Cycle of a Securities Trade Trade Capture / Confirmation \ Instructions Validation / Matching / Reporting Unmatched Investigation and Repairs / Settlement and Fails / Fails Management Reconciliation / Breaks Simulation: Securities Settlement Delegates work in teams to settle basic transactions. This simulation is revisited throughout the course as delegates realise that even with confirmation, matching and reconciliation processes, you can still end up with failed trades and monetary losses. They are encouraged to manage these losses through funding their nostros and utilising stock borrowing. Delegates quickly learn how easy it is for settlement to go wrong and the costs involved! And importantly what can be done about it.

3 Global Custody Introduction covering a definition of Global Custody, who provides the service, the users, their requirements and types of custody What is a Sub-Custodian? The Risks! Basic Custody Services Settlement The key settlement process steps Safekeeping of securities Income collection Corporate Actions Cash Management Funding Interbank cash market The importance of repo Tri partite repo Withholding Tax reclamation Value Added Services Securities lending and borrowing Basic outline of a securities lending trade The use of collateral Fees, haircuts, margin calls Exercise: calculating fees and margin calls on securities lending trades The role of ICMA and ISLA The importance of securities lending to the profitability of a Custodian Investment Accounting Operational Performance Measurement Trustee services Portfolio valuation Derivatives The Derivatives market ETD Clearing The role of the clearing broker Case study: we look at how trades are given up to the clearing broker for settlement and why this is important OTC Clearing Why and where are IRS and CDS trades now cleared? Collateral Management Why collateral must be managed! The risks of poor management Emerging Markets Coverage

4 Corporate actions What are they? Why do they occur? Common types of corporate actions and examples Equity Restructuring Consolidation or Reverse Split Capital Repayment Buy Back Warrant Exercise Debt Restructuring Debt Redemption Raising of Capital Rights Issue Case study Dividend Life Cycle Exercises: Basic dividend calculations Record date / ex date / pay date Exercises are used to enable the delegates to understand the importance and impact incorrect record keeping can have Market claims The stock record Impact of corporate actions on derivative products The growing importance of proxy voting Importance of timing Custody Charges What does Custody cost? Request for Proposals (RFPs) Case Study: Choosing a Custody Service Provider See below for details Request For Proposal Case Study Delegates are put into teams and asked to play the role of a Middle Eastern investor looking to choose a Custodian. They are given the requirements of the investor, in terms of market coverage etc and then are asked to identify 10 key topics on which potential suppliers of your Global Custody services can differentiate themselves: Some of the Key Topics to be addressed during selection, should include: Importance of the custody division to the custodian s overall business. Settlement standards and practices. Safekeeping standards and practices. Systems and communications. Corporate action procedures.

5 Income collection and tax reclamation Geographical coverage. Nature of global network. Quality of sub-custodian network Delegates will then be asked to give a short presentation on the key topics of their Request for Proposal (RFP)! enquiries@redcliffetraining.co.uk +44 (0)

Securities Settlement and Global Custody

Securities Settlement and Global Custody A 3 days course This course can also be presented in-house for your company or via live on-line webinar The Banking and Corporate Finance Training Specialist Quizzes,