Learn Capital Markets for testers

1. Workshop hosted by Time2test Limited in conjunction with AsymilateLimited
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2. Agenda
What's the agenda?
Flexible agenda to met the delegates’ requirements.
Evening times:
6pm –10am ( 4 hours with coffee breaks)
Weekend and weekday times:
Start at 9am to 5pm with breaks and lunch
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3. House Rules!
Lavatories
Food and Drink in the class room
Drinks –water from the kitchen area
Fire Alarm
Room Access during lunch and breaks
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4. Pre-requisites
•Your laptop and permissions to install software
•Windows machine for installation of the client software , ftp clients and other useful tools
•Pen and notepad for taking notes
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3 mins

5. Fast Paced course?
Lots to go through
We only have a limited time so the pace is going to be fast
The workshop will introduce you to the Capital markets domain from the Quality assurance and testing perspective.
We will introduce you to Asymilate’sCapital Markets Testing tool : Caesar
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6. About me –MiteshSoni
Over 20 years in the Capital Markets Banking Domain
Has worked for major investment banks as a principal consultant
Specialises in Capital Markets Quality assurance and Testing solutions.
Managing Director of AsymilateLimited
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7. About me! –Viresh Doshi
Over 15 years testing experience
Extensively worked in the Internet domain
Technical testing specialist
Process Improvements Advocate
Automation testing advocate
Keen follower of Agile and it’s techniques
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8. What do you want to get out of the course?
Note down your goalsand objectivesone per sticky note and describe them.
Note down any questionsyou have that you would like answered.
One per sticky note
Lets review them at the end of the course.
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10 mins

9. What do you already know about the capital markets domain?
Lets talk and note down what we already know.
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5 mins

10. Capital Markets Testing overview
The workshop will be delivered in a classroom lecture style.
We will use a popular Capital Markets Application to describe the domain and concepts for testing and QA
We will also refer back to Caesar application which is a test harness built to perform regression testing for Capital Markets.
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11. Course Overview
The 2 day Capital Markets Testing workshop is split into three categories:
1.Banking Domain
2.Technical Skills
3.Testing skills
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12. Course Overview –Banking Domain
Capital Markets -what is capital markets in the investment banking arena?
Learn about investment banking trading
Learn the different banking products (ADR
1.Equities
2.Repos
3.Swaps
4.Bonds
5.Derivatives
Learn the workflow -Trade, Transfer, Message
Learn about SWIFT messages
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Learn STP –straight through processing
Risk and Reporting -EOD
Learn about these objects(trades, transfers, messages, tasks, legal entities, tasks, legal entities)
Learn about static data
Learn about netting
Learn about SDI
Learn about rejected trades and resolution
Learn about Front office, Middle office and Back office

13. Course Overview –Technical Skills
Unix and linuxfor running jobs and viewing log files and starting and stopping
Telnet and FTP for test data manipulation
XML files manipulation
Basic of SQL for test data preparation
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14. Course Overview –Testing Skills
Popular test variations for Test data Prep
Functional testing and Regression testing test plans and test cases creation
Performance Testing planning and simulation
Test Environments and development environment.
Problems and Defect finding and resolution
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15. Recap
Introductions complete
Objectives set on the sticky notes
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16. Quick recap of topics covered in the first session
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17. FX example
FX –Foreign Exchange
Trade Lifecycle –Pricing to Accounting
Front office
Back office
Middle office
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18. Products
Securities-Bonds, Equities
Derivatives
Money Markets
FX
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19. Areas covered
Domestic Banking
Investment Banking –Capital Markets
Trading and Speculation
Hedging
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20. Chocolate –Cadburys Example
Chocolate is made in the UK
Raw material –Coco Beans are needed from South America
Instead of buying chocolate at a fluctuating price, Cadburys will enter into the derivatives market for a product that will fix the price for additional fee(s).
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21. Nick Leeson–Barings Example
Investment bank is brought down due to a rogue trader who confirmed his own trades.
Large futures trades sensitive to changes in price of underlying asset led to big losses
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22. Quality Gates
Four Eyes Principle –supervisory checks to maintain audit trail
Kyc–Know your customer
Dodd Frank –OTC markets being forced to go through regulated exchanges to prevent big losses.
Basel committee recommendations
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23. Lehman Brothers example
Investment bank collapses.
Credit Defaults triggered large payoutsthat the bank could not guarantee
Counterparties exposed to Leemanstriggering systemic risk
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24. Topics
Settlement t+2 for FX (exceptions CAD)
CLS –continuous link settlement – organisation that facilitates FX settlement and reduces settlement risk
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25. Topics
Quantitiveeasing –effects on exchange rates
Static Data –reference data
Reuters/Bloomberg for pricing
SWIFT –confirmations gateway MT/MX
Trading book –hierarchy of trade activity
Netting –aggregate settlement
Matching Confirmations Process
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26. Terminology
Nostro–our account, at our agent
Vostro –cpty’saccount with agent
Loro–cpty’saccount held with our organisation who is an agent
STP –Straight Through Processing
Netting –an agreement to aggregate the transactions for net settlement www.time2test.co.uk 26

27. Quiz
What is the difference between Front Office and Back office?
How would you describe Middle Office?
What products are traded in Capital Markets?
What typical attributes make up a SWIFT message?
What is benefit of netting?
What are Chinese walls at Investment banks?
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28. Quiz
What does it mean to Settle a trade?
What is a confirmation?
What is a counterparty?
Can you give some examples of static data?
What is STP?
What in terms of financial reporting is the main difference between a derivative and an equity?
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29. Quick recap of topics covered in the session
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30. Trade Lifecycle
Happy Day workflow scenario
Rainy Day scenario
Counterparty becomes insolvent
Incorrect Static Data propagation
Rate tolerances breached
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Many considerations for Test Scenarios

31. Cashflowand security movement
All transactions have movement of cash and / or security
Cashflowsare basic building block for valuation purposes
Discounted Cashflowsused to compute net present value
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32. Delivery Concepts
Deliver Against Payment (DAP) – Security and cash exchanged simultaneously
Delivery Free of Payment (DFP) – Security and Cash are exchanged independently(carries more risk)
Contingent accounting –used to build up general ledger to represent the trade as it is confirmed and settled
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33. Bond Example
Bonds entitle buyer to interest payments according to the bond definition
Bonds are issued by governments and corporations to raised debt
ISIN –unique number to identify the Bond
Coupon –term to denote the interest payable
Value of the bond is inversely proportional to interest rates.
Yield curves are used to create net present value computations
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34. IRS –Interest Rate swap
Two parties in a transaction where one party pays fixed rate of interest and the other pays floating rate.
Used by companies to hedge against interest rate movements
Or to raise capital by companies who are lower credit grade clients
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35. OTC –over the counter
OTC –over the counter products allow the counterparties to agree flexible terms and conditions
Exchange traded –product conditions are determined by the exchange
CCP –Central Counter Party –Rapidly becoming the new infrastructure for settlement.
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36. Forward Products
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Forwards are products where the price and conditions are agreed today for a future settlement
Used for hedging purposes to avoid fluctuations of rates and prices
Also can be used speculatively for trading purposes

37. Repo Products
Repurchase Agreements – Agreements where on counterparty lends the other a sum of money which is backed by collateral from the other counterparty
Used frequently for Short Term financing by large investment banks
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38. Buy/Sell Back Products
Repurchase Agreements
Short Term financing
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39. Option Basics
The right but not the obligation to buy or sell an asset at a given strike price and date schedule.
European –one fixed exercise date
American –can be exercised on any date to expiry
Bermuden–a schedule of expiry dates
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40. Terminology
Arbitrage –small differences in rates that allow you to simultaneously buy and sell an asset to capitalise on the rate difference.
Short selling –selling an asset even though you may not own the asset by taking a speculative view on where the market is heading.
Novation –transfer of ownership
LIBOR –Committee that sets the interest rates
ISDA agreement –legal framework for trade confirmation and settlement
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41. Terminology
Equity option –put / call
Exercised options -American , Bermudian, European
Swaption–the option to exchange fixed for floating in a swap trade
Asset swap –exchange the income stream from an asset pool to a cash income stream
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42. Goals and Objectives review and what’s next?
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43. Goals and Objectives
Review the Sticky notes
Did the course meet your goals and objectives?
Feedback will be requested via email.
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44. Recommend us?
Recommend your friends and earn some incentives:
iPad
Kindle
Android Tablet
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