Acquiring insight and knowledge of:
What is aim of liberalisation? What are the consequences? The EU 3rd energy package.
Risk and return; risk-reward ratio; risk versus uncertainty; quantification versus qualification of risk.
Price risk; hedging; market characteristics, such as location, delivery time/period, time to maturity.
Identification of risk, measuring risk and control of risk; liquidation, insurance and hedging.
The concept volatility explained; the calculation and the interpretation of volatility figures.
Credit risk and delivery risk; the consequences of hedging for market risk and counterparty risk.
Clearing; the concept of netting; credit limits; ratings; sleeving; systemic risk and regulation.
Market liquidity versus funding liquidity; indicators for market liquidity; position limits.
Interaction between the sales department and trade and between generation and the trading unit.
Departments and sub-departments within the trading business unit, and their role.
Trading versus procurement and sales; decision making & connectivity; trading tools & data.
About procurement, sales, balancing, hedging, arbitrage and speculation. Why is it applied?
How does trading take place? How are prices set? What orders are executed? When? How?
What order types are applied and for what reasons? Market, limit, all-or-none, iceberg & stop-loss order.
Central counterparty; clearing house & clearing members; credit risk; margining & collateralisation.
Physical delivery versus cash settlement; settlement procedures; examples with calculations.
Pre-trade, trade and post-trade processes; tasks & responsibilities of front/middle & back office staff.
The task of energy trading and risk management software; the users and purposes of the tool.
The difference between spot/prompt and forward/futures markets, prices and transactions.
What are derivatives? What are these financial instruments used for? By whom are these tools applied?
What is a forward or futures contract? What are the differential between those? Contract specs.
What is a CFD? What are CFDs used for? Where can the instruments be traded? How are these settled?
What is a swap? What types of swaps are available? What is their purpose? How are swaps settled?
What is a call or put option? How can these tools be applied? How does pricing of options take place?
How can OTC market be characterized? How is OTC trading organized? What are master agreements?
What is the role of a broker? What are the differentials between inter-dealer brokers and broker-dealers?
What features does exchange trading have? How is it organized? What fees are in place for members?
What details are relevant to traders? What is Trayport, how does it work and why do traders use it?
How do prices arise in the market? What factors drive prices? What is an index? What is it used for?
Forex exposures of companies; the role of the treasury department; currency pairs; exchange rates.
Bookkeeping; accounting rules; the differences & consequences of M-to-M vs. historical cost accounting.
How do firms organize in-house trading, between trade and other business units? Why? At what price?
Explanation of the terminology which is related to the value chain.
What do the concepts of long or short imply? Likewise for bullish or bearish, or opening or closing.
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Course Guide
