The programmes “Swaps & Swaps Trading” (all levels) are specifically designed to expand delegates’ knowledge of, and skills with respect to swaps, their features, how to use these instruments, why and when to use them, and how they can be of help when risk exposures are to be managed. The pricing and valuation of swaps is also incorporated, and therefore the aim will also be at (potential) price changes. Last but not least, these programmes offer insight in the opportunities and risks of these instruments and the incorporation of swaps in energy portfolios.
In the first level of the “Swaps & Swaps Trading” programmes focus is on the fundamentals of swap contracts. This is explained by focusing on interest rate swaps. Interest rate swaps are used by energy companies to manage cash flows and interest payments on working/economic capital. Interest rate swaps are the most popular type of swaps by far, and they also represent the first swap contract ever concluded.
In this programme contracts specifications are taken into consideration and settlement procedures are explained. This programme will therefore equip delegates with a working knowledge of how to trade swaps.
In the second level of the “Swaps & Swaps Trading” programmes focus is on energy swaps, with underlying value oil, gas, coal, power, and/or emission rights. In this programme attention is given to the pay-off structure of cash settled swaps, and also to the physical unwinding of contracts with physical delivery. Students are explained how energy swaps are used as financial instruments with the purpose of hedging exposures, exchanging physical positions and fulfilling financial desires and physical obligations.
In the third level of the “Swaps & Swaps Trading” programmes focus is on risk management and optimisation of the currency portfolio. This programme goes beyond energy swaps, and focuses on FX swaps. Energy trading organisations execute transactions in US dollars (oil and coal), pound sterling (UK gas), euros (continental power) and other currencies. They report however (p.e. in their annual reports) in one single currency. And since currency exchanges rate fluctuate over time these organisations are exposed to currency risk. The application of FX transactions (such as FX forwards and FX swaps) is covered in an intensive way and helps students to become masters of swaps.
In the fourth level of the “Swaps & Swaps Trading” programmes focus is on the application of swaptions in general and credit default swaps (CDS) specifically. Students are also explained how these instruments can be of help in order to mitigate credit risk. The working and application of credit default swaps is explained, and attention is provided to how these instruments can be allocated. This programme covers the role of CDS is the credit crisis and provides insight in the risks related to them.
In this level also swaptions are incorporated. These ‘derivatives on derivatives’ are actually combinations of two financial instruments that are already complex as stand alones. Now they are even combined and that makes valuation and understanding them even more complex. Energy companies however make use of these instruments and therefore professionals must master expertise in this field.
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