Commodities, Derivatives and Structured Products

Commodities - Part 9


This eCourse consists of two modules. Module 1 examines the market for physical commodities, including key concepts such as basic contract terminology, pricing, logistics, trade flows, and storage. In simple terms, physical commodity trading involves moving commodities from one location to another. However, moving heavy and cumbersome materials across seas and other transportation nodes is, unsurprisingly, not easy in practice.

Module 2 examines commodity derivatives, including both exchange-traded and over-the-counter (OTC) contracts. Commodity derivatives play a vital role in commodity markets, allowing producers and consumers to manage (hedge) their physical commodity exposures and traders/investors to speculate on commodity prices.


On completion of this course, you will be able to:
- Identify how physical commodities are bought and sold, including the key contractual terms between buyers and sellers
- Recognise how a contract price may be fixed for the duration of the contract or based on a formula
- Identify the main participants in physical commodity markets and how key market locations emerge
- Define the concept of geographical arbitrage and the importance of logistics and trade flows in this regard
- Define the concept of timing arbitrage and the importance of storage facilities and pricing in this regard
- Recognise the crucial role that derivatives markets play in facilitating the management of risk for commodity market participants
- Identify the key concepts that are relevant to the execution of exchange-traded commodity futures contracts
- Differentiate exchange-traded contracts from OTC contracts such as forwards and swaps
- List some of the strategies that are used for speculative trading purposes


Module 1: Commodities - Physical Trading
Topic 1: Overview of Physical Trading
Topic 2: Pricing
Topic 3: Market Participants & Locations
Topic 4: Geographical Arbitrage
Topic 5: Timing Arbitrage

Module 2: Commodities – Derivatives Trading
Topic 1: Overview of Derivatives Trading
Topic 2: Exchange Trading
Topic 3: OTC Trading
Topic 4: Speculative Trading


Relevant Subject
Type 2 - Dealing in futures contracts
Type 5 - Advising on futures contracts
SFC:1.50, PWMA:1.50
All Member: HK$460
Staff of Corporate Member: HK$460
Non-Member: HK$665