Managing Derivatives Contracts – My Book

Managing Derivatives Contracts is a comprehensive and practical treatment of the end-to-end management of the derivatives contract operations, systems, and platforms that support the trading and business of derivative products. This book focuses on the processes and systems in the derivatives contract life cycle that underlie and implement the activities of derivatives trading, pricing, and risk management.

This book lays out all the fundamentals needed to understand, conduct, and manage derivatives operations. In particular, this book provides both introductory and in-depth discussion on topics such as: derivative product classes; the market structure, mechanics, and players of derivatives markets; types of derivative contracts and life cycle management; derivatives technology platforms, software systems, and protocols; derivatives contracts management; and the new regulatory landscape as shaped by reforms such as Dodd-Frank Title VII and EMIR. Managing Derivatives Contracts focuses on the operational processes and market environment of the derivatives life cycle; it does not address the mathematics or finance of derivatives trading, which are abundantly treated in the standard literature.

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Table of Contents

Part – I: The Big Picture

Chapter 1: The Derivatives Market

Chapter 2: The Derivative Products

Chapter 3: Derivatives and Risk Management

Chapter 4: The Derivatives Contract

Part – II – Market Structure

Chapter 5: The Market Players

Chapter 6: The Buy-Side Organization

Chapter 7: The Sell-Side Organization

Chapter 8: Market and Reference Data

Chapter 9: The Dodd-Frank Act and Other Reforms

Part – III: Contract Life Cycle

Chapter 10: The Derivatives Contract Life Cycle

Chapter 11: Collateral Management

Chapter 12: Futures Life Cycle

Chapter 13: Listed Options Life Cycle

Chapter 14: OTC Cleared Contract Life Cycle

Chapter 15: OTC Bilateral Contract Life Cycle

Chapter 16: Credit Contract Life Cycle

Part – IV: Systems

Chapter 17: Derivatives and Information Technology

Chapter 18: IT Platforms and Systems

Chapter 19: Platform Architecture and Implementation Guidelines

Managing Derivatives Contracts is divided into four parts. The first part provides a structural overview of the derivatives markets and product classes. The second part examines the roles of derivatives market players, the organization of buy-side and sell-side firms, critical data elements, and the Dodd-Frank reforms. The third part explains the framework of total market flow and straight-through processing as constrained by regulatory compliance, the core of the book details the contract life cycle from origination to expiration for each of the major derivatives product classes, including listed futures and options, cleared and bilateral OTC swaps, and credit derivatives. The final part of the book explores the underlying information technology platform, software systems, and protocols that drive the end-to-end business of derivatives. In particular, it supplies actionable guidelines on how to build a platform using vendor products, in-house development, or a hybrid approach.

What you’ll learn:

  • various execution models in the derivatives market
  • STP contract workflow within the firm and across external entities
  • market structure involving dealers, inter-dealer brokers, buy-side firms, servicing firms, regulatory bodies, and other third-party administrators
  • notable species of exotic derivatives as well as all the major derivatives product classes
  • implementation and integration of vendor and in-house platforms
  • FpML, FIX, and SWIFT protocols and standards
  • operational aspects of post-reform regulatory compliance

Who this book is for:

Managing the Derivatives Life Cycle is suitable for personnel on all teams directly or indirectly engaged in derivatives trading, especially those personnel involved in derivatives operations and the underlying systems, who typically outnumber the traders and quants in a firm by an order of magnitude. Its primary readerships are newcomers to the field, middle-office teams of derivatives operations professionals, and technology personnel (project managers, business analysts,developers, and testers). Its secondary readerships include front-office teams (traders), back-office teams (payment processing), mid-level management, and auditors and compliance teams.