Introduction to Derivatives - Part 1

Introduction to Derivatives - Part 1


This eCourse consists of three modules. Module 1 focuses on the basic types of derivatives – forward-type instruments (forwards, futures, and swaps) and options. The key differences between these instruments are described, along with the basics of their pricing. The module also discusses some of the risks that arise from the use of derivatives in general, particularly in light of global financial crisis and other events in recent times.

Module 2 describes derivatives markets today, both OTC and exchange-traded – and how the lines between these have become blurred by regulations adopted following the global financial crisis. The module also outlines the role of end-users and intermediaries in derivatives markets, as well as the many applications of derivatives for the various market players.

Module 3 covers the most basic derivative building block – the forward transaction – which can take the form of OTC forwards or and exchange-traded futures contracts. The similarities and the differences between these two product types are examined. It explains how it is becoming increasingly difficult to distinguish between the two. Finally the trends in the markets for both of these derivatives are discussed.


On completion of this course, you will be able to:
- List the broad categories of derivatives
- Recognize how derivatives pricing is based on the idea that relative prices should be "arbitrage-free" Recall why there is considerable apprehension regarding the risks specific to derivatives
- List the differences between OTC derivatives and exchange-traded derivatives markets
- Recognize the role of the key market players in derivatives markets
- Identify the motivations behind using derivatives
- Describe the key differences and similarities between forwards and futures
- Explain the different risks associated with forwards and futures
- Discuss the ongoing changes in forward and futures markets


Module 1: Derivatives - An Introduction
Topic 1: Derivatives Basics
Topic 2: Derivatives Risks

Module 2: Derivatives - Markets
Topic 1: Derivatives Market
Topic 2: Market Players
Topic 3: Derivatives Uses


SFC:2.5, PWMA:2.5
All Member: HK$650
Non-Member: HK$925
Staff of Corporate Member: HK$650