International Payments, Settlement And Trading Systems by Informa Middle East

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International Payments, Settlement And Trading Systems Best Practice And Current Developments

9 â&#x20AC;&#x201C; 12 September 2012

Radisson Royal Hotel Dubai, UAE

TOP 6 LEARNING OBJECTIVES 1. Gain knowledge of best practice and current developments for the rapidly evolving areas of trading systems, international payment systems, global custodial services and clearing and settlement systems, with a focus on support from back and middle offices 2. Ensure the operations team is informed, engaged and motivated when implementing and operating the evolving functionalities of trading, payment and settlement systems 3. Overview issues underlying effective solutions for managing and controlling operations, transactions volume, and third party supplier relationships for international payment, settlement and trading activities 4. Highlight best practice and recent developments for international payment, settlement and trading operations from control, monitoring, and risk management perspectives 5. Discuss core and regulatory oversight principles and regulatory initiatives for international payment, settlement and trading systems 6. Investigate risks inherent to interdependencies between national and international payment and settlement systems and systematic and systemic risks within retail and largevolume payment systems

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International Payments, Settlement And Trading Systems Best Practice And Current Developments 9 – 12 September 2012 • Radisson Royal Hotel, Dubai, UAE Training Aids

Course Description This course presents modern and current perspectives for managing the back office and middle operations and management for trading, clearing, settlement, custodial, asset serving, treasury, funds transfers, risk management and control functions • Operational risk management and operations management procedures are discussed from perspectives of trading, clearing, settlement, custodial, asset serving, treasury, Funds Transfer Pricing (FTP), Straight-Through Processing (STP) and risk management functions • Presentation of modern perspective for defining organisational units at financial and non-financial institutions, which segregates organisational activities in into back, middle and front-office functions • Procedures for promoting proactive operational approaches to continuously improving quality of asset servicing and corporate actions processes including event communication, collection and disbursement of entitlements, and event processing

Throughout the course, delegates are presented with best practice and recent developments and trends for trading, custodial, payments and settlement processes within an interactive lecture format. The format is supplemented with a large number of short case studies/exhibits, which are based on recent and historical market trading, custodial, payments and settlement failures and other issues directly related to course content. This Approach offers delegates a thorough understanding of current state and best practice for operations areas of trading, custodial, payments and settlement systems.

Who Should Attend? • Trading, clearing and settlement personnel engaged in foreign exchange, money market, securities and derivatives functions

• Operational and operations risk categories are presented as related to trading, custodial, payments and settlement processes and back and middle-office operations.

• Back, middle and front-office personnel, including personnel involved in various operational aspects of payments, settlements, and trading processing activities

• Problematic areas for national and international payment, settlement and trading systems are highlighted and procedures are outlined to minimise errors, fraud and disruptions

• Risk and control analysts involved with operations management and operational risk management and control

• Oversight and control procedures are presented for international payment, settlement and trading systems operating within core and systemically important payment systems • Overview recent developments in clearing, settlement, payments and trading processing and reporting standardisation through industrysupport protocols such as recent developments for the SWIFT and FIX communication protocols, and implementing Straight-Through Processing (STP) frameworks, Real-Time Gross Settlement Systems (RTGSs) and electronic Bank Payment Obligation (BPO) • Additionally, activities are examined within operational risk management, and operations control and management for global custodial services and trading, international payments and settlement systems, including: - Historical perspectives and developments on move towards electronic trading platforms and the trade-life cycle - Risk-based margining and effective collateral management systems - Best practice for reconciliations, exceptions handling, and failed trades

• Clearinghouse personnel, central bank officers and financial markets supervisors • Back office personnel involved in local and global custodial services, corporate actions and asset servicing • Chief Information Officers (CIOs), IT systems personnel and IT security personnel • Chief Risk Officers (CROs) and other risk management and control personnel • Regulatory and compliance officers • Internal and external auditors

Would you like to run this course in-house?

- Best practice for margining, netting and novations in payment & settlement processing - Shortfall management procedures using securities lending, repos, and FX swaps

The in-house training division of IIR Middle East

- Fraud detection, controls and prevention - Anti-money laundering initiatives - Financial services outsourcing for the custodial, trading and settlement processing

+971 4 335 2437

+971 4 335 2438

Tel: +971 4 407 2624 • Email: CTS@iirme.com www.iirme.com/cts

www.iirme.com/tradingsystems

Course Timings Registration for this course will be at 07:30 on the first day. The course will commence at 08:00 every day and finish at 14:30.There will be breaks for refreshments at approximately 10:30 and 12:30 and lunch will be served at the end of each day’s session. • Global shift towards high frequency trading - controversies, myths and criticisms • High frequency trading and its role in trading in the current market environment

Day One Operational And Operations Risk Exposures, Trade-Life Cycle, Evolution of Trading Systems And Trade Process Developments Module 1 – Operational And Operations Risk Categories Affecting International Payments, Settlement And Trading Systems

Day Two

• Exposures and implications, including summary discussions of the following non-exhaustive listing of risk exposures: - Asset servicing risk - Business processes risks - Business continuity risk - Clearing risk - Collateral risk - Commingling risk - Concentration risk - Counterparty risks - Country risk - Cross-border settlement risk - Custody risk - Data quality risk - Daylight exposure risk - Disaster event risk - Trade execution risk - Fiduciary risk - Fraud risk - Funding shortfall risk - Geopolitical risk - Gridlocked systems risk - Legal capacity risk - Legal jurisdiction risk - Market-making risk - Market liquidity risk - Money laundering risk - Organizational risk - Outsourcing risk - Overnight exposure risk - Payment systems risk - Physical assets risk - Reconciliation risk - Regulatory compliance risk - Reputational risks - Settlement risk - Systemic concentration risk - Systemic spillover risk - Systems security risk - Technology risk - Unwinding risk

Back, Middle And Front Office Operations, Clearing And Settlement Processes, Custodial Services And Corporate Actions Processing Module 4 – Organisational Structure For Modern Financial Institutions – Back, Middle And Front Office Operational Units • Defining back, middle and front offices – general structure, core elements and functions • Information requirements for back, middle and front offices and other operations units • Back and middle-office responsibilities of the derivatives securities operations • Clearing and settlement responsibilities for back, middle and front office and independent risk reporting

Exhibit – ACI’s model responsibility code for the back office Module 5 – Trade Clearing Process • • • •

Module 2 – The Trade-Life Cycle – Overview • • • • • • • • • •

Transaction types, trade orders and trade information requirements Pre and post-trade processing information considerations - summary Book entry transfers, immobilisation and dematerialisation Transactions processing – trade order routing, execution, and cashiering services Trade matching, execution, capture, confirmation and affirmation Trade amendments, enhancements, terminations and assignments Trade comparison, reconciliation, recording and allocation Trade clearance and settlement processes – overviews Trade reporting, trade record accounting and trade risk management, Straight Through Processing (STP) initiatives - implementation issues and barriers

Exhibit – Mapping the trade-life cycle to systems and technological operations functions Module 3 – Current Developments And A Historical Perspective For Trading Systems: High-Frequency Trading, Dark Pools, And Alternative Trading Systems • Transformation from physical exchange floor trading to electronic trading systems • Alternative Trading Platforms (ATSs), Electronic Communication Networks (ECNs) and Multilateral Trading Facilities (MTFs) – developments, benefits, challenges and the future • High Frequency Trading (HFT) - algorithmic trading, low latency and colocations • Dark liquidity pools, crossing networks, price discovery and direct market access

+971 4 335 2437

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Exhibit – Physical financial exchange consolidations during late 1990s and in the 2000s

Clearing mechanisms, processes, and controls – overview Services offered by Clearinghouses and Central Counterparties (CCPs) Centralised clearing for exchange-traded derivatives Sample checklist for clearing and settling OTC derivatives transactions

Exhibit – Examples of default or near-default of clearing-house members Exhibit – Outsourcing and leasing of clearing services Module 6A – Trade Settlement Process - I • Settlement processes and Standard Settlement Instructions (SSIs) – overview • Settlement conventions, cash flows and selecting the settlement method • Pre and post settlement issues – settlement cycles, exchange for value settlement bases, business day conventions and day count conventions • Trade confirmation, capture and matching and settlement instruction matching • Settlement procedures and instructions for exchange-traded and otc products Module 6B – Trade Settlement Process - II • ISDA 1992 master agreement and implications for settlement – overview • Real-Time Gross Settlement Systems (RTGS) – impact, benefits and risks • Continuous Linked Settlement (CLS) bank system – impact, benefits and risks • Settlement risks I – factors affecting settlement, settlement failure and write-offs • Settlement risks II - enforcing settlement agreement and settlement failures management • Monitoring procedures, validations and controls for the settlement process

www.iirme.com/tradingsystems

Exhibit – Harmonising Euro bulk payment systems across European Union through the Single Euro Payments Area (SEPA) initiative - implementation, deadlines, and issues

Module 7 – Custodial Services, Asset Servicing And Corporate Actions Processing • Custodial services, local and global custodians, and central securities depositories • Core and value-added custodial services - segregation and safe custody of client assets, beneficial ownership and nominee accounts • Custodial services – standing instructions, securities transfers, settlement accounting, and custodial reporting requirements • Corporate actions processing, asset servicing and the role of global custodian • Global custodian selection process, service level agreements and reviewing a custodian’s suitability

Exhibit – History and evolution of global custodian industry

Module 9 – Trade, Payments, And Settlements Reconciliations – Managing Exceptions And Failed Trades • • • • • •

Reconciliation process – terminology, types, and methods – overview Manual versus automated reconciliation processes Trade-life reconciliation process for cash and securities reconciliations Positions, payment, nostro, and collateral reconciliations Reconciliation for brokers, custodial services, and fund accountants Exceptions handling – categorising, prioritising and processing exceptions • Failed trades issues – causes, consequences, prevention, and resolution Module 10A – Procedures For Managing And Controlling Operations Risks I – Treasury Operations - Internal Funds Transfer Pricing, Securities Lending, REPOs, And FX Swaps

Exhibit – Assets under management for the major global and regional custodians Exhibit – ECSDA classification of corporate actions Exhibit – Corporate actions industry – summary statistics

Day Three International Payment Systems; Trade, Payments, And Settlements Reconciliations; Treasury Operations, Funds Transfer Pricing, Securities Lending, Repos, And FX Swaps Module 8A – National And International Payment And Settlement Systems – I • National and international payment and settlement mechanisms – overview • Retail and large-value payment systems and funds transfers – a comparison • Issues and benefits of Large-Volume Payment Systems (LVPS) • National and international payment and funding systems and role of treasury operations • Interbank payment, clearing, and settlement mechanisms – overview and linkages • Comparing Real-Time Gross Settlement Systems (RTGS), Continuous Linked Settlement (CLS), and Funds Transfers for Cross-Border Payment Systems • Implications of shift towards payment systems customisation and centralisation • Systemically important payment systems, liquidity provisions, and avoiding gridlock

Exhibit – Examples of retail- and large-value payment systems and funds transfers Module 8B – National And International Payment And Settlement Systems – II • Cross-border collateral agreements for international payment and settlement systems • Interdependence between national payment and settlement systems • Central bank oversight and control for international payment and settlement systems • Funds transfer risks and international payment systems • Systemic risks inherent to Large-Volume Payment Systems (LVPS) • Impact and costs of systemic payment transmission disruptions • Managing systemic risks for systemically important payment and settlement systems

+971 4 335 2437

+971 4 335 2438

• Treasury operations, treasury products risk spectrum and managing the treasury function • Cash and liquidity management functions – cash operating cycle budgeting, cash pooling and cash flow timing • Funds Transfer Pricing (FTP), Economic Transfer Prices (ETPs), and costs of internal funds • Cash and securities shortfall management and supplemental funding options using securities lending, REPOS, and FX swaps • Developing role of the global treasurer: centralising treasury operations, payment factories, centralised cash and collateral management and share treasury service centers

Exhibit – Differences between securities lending and REPOS Exhibit – Comparing Cross-Currency Interest Rate Swaps and FX Swaps

Day Four Collateral Management, Netting, Novations, Fraud, Money Laundering, Security Identification Codes, Reporting And Communication Protocols, Straight through Processing (STP) And Business Process Outsourcing Module 10B – Procedures For Managing And Controlling Operations Risks II – Collateral And Margin Management, Netting, Novations And Risk Reports • Marking-to-market versus marking-to-model valuations for margin accounts • Risk-based margining, collateral management systems and collateral risk reduction • Advantages and disadvantages of netting arrangements, including position and trade netting, continuous and deferred net settlement, close-out netting, multilateral netting, etc. • International cash management, foreign exchange settlement and currency netting • Novation, netting by novation, clearinghouses and counterparty risk reduction • Position reporting - daily price risk report, trading accounts and accrual accounts

Exhibit – Risk-based margining and collateral systems – CME’s SPAN and OCC’s TIMS Exhibit – Operations risks and the derivatives transaction completion process

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Module 11 – Fraud In International Payment And Settlement Processes • Overview of financial fraud and insider abuse • Red flags for detecting potential fraud and insider abuse activities • Fraud detecting procedures for payment systems Module 12 – Money Laundering And Payment Processing Systems • Three stages of money laundering process • Money laundering red flags within international and offshore banks activities • Anti-Money Laundering (AML) initiatives: detection, prevention and reporting procedures • Mitigating AML risks – control and monitoring procedures • Monitoring, controlling of money laundering and preventing money laundering Module 13 – Systems And Technology – Security Identification Codes, Reporting And Communication Protocols And Straight through Processing (STP) • Role of systems and technology in payment, settlement and trading systems – overview • Security identification codes, security sorting codes and trade instruction systems • Financial Information Depositories (FDIs) and customer information transfer systems • Financial Information Communication Standards – SWIFT protocol for the back office • Financial Information Communication Standards – FIX protocol for the front office • Financial services, middleware options, Enterprise Resource Planning (ERP) and Service Orientated Architecture (SOA) • Straight through Processing (STP) and trade-life cycle risks – benefits and barriers • Static data processing, corporate actions, and ensuring STP payment capabilities • Extensible Business Reporting Language (XBRL) and standardised financial reporting Module 14 – Business Process Outsourcing Of Back-Office Operations And Other Financial Services Functions • Business Process Outsourcing (BPO) arrangements – definitions and concepts • Outsourcing non-core financial services and operations – a summary perspective • Issues and impact of outsourcing operations functions at financial institutions • Managing BPO relationships – continuing, modifying, or terminating BPO arrangements

Exhibit – Examples and statistics of outsourcing arrangements of non-core financial services

Short Cases And Exhibits To Be Included In Discussions During Course Include: • NYSE paperwork crisis and Wednesday trading halts on US Exchanges during Mid-1960s • Breakdown of Bretton Woods Agreement in February 1973 and its effects on FOREX markets • Bankhaus ID Herstatt (Germany) closing and cross-border settlement risks during June 1974 • Franklin Bank of New York collapse and interbank FOREX speculative trading during October 1974 • Bank of New York, settlement processing system malfunction during November 1985 • “Big Bang” deregulation of UK financial markets and London Stock Exchange during 1986 • Bank of Credit and Commerce International (BCCI), settlement failures, fraud, money laundering, covert activities and legal jurisdiction issues during July 1991 • Trade Halts Due to LaSalle Street and Chicago Financial District flooding during April 1992 • Cancellation of the London Stock Exchange’s TARUS trade settlement system in 1993 • Barings Bank (UK), Euros receipts cancellations, ECU clearing system knock-on effects during February 1995 • Russian money laundering scandal and the Bank of New York during the late 1990s • OTC energy markets trading/clearing, Enron (USA) regulatory loophole, lack of oversight during the late 1990s • Computer glitch on the Tokyo Stock Exchange on November 1, 2005 • Mizuho Securities, fat fingers, and erroneous trade specification input during December 2005 • Taiwanese earthquake of December 2006 and disrupted electronic communications networks • HSBC customer fraud and financial services outsourcing centers during early 2000s • Confirmations backlog and novations issues for credit derivatives during the Mid-2000s • Standardisation of Credit Default Swaps (CDS) trading in the aftermath of the credit crisis of the late 2000s and the role of clearinghouses • Severed submerged communication cables on the floor of the Mediterranean sea near Northern Egypt and global communications network disruptions during January 2008 • Lehman Brothers, Repo 105 transactions and creative accounting during 2008 • Account takeovers and fraudulent activities within the US Automated Clearinghouse (ACH) payments network during mid-2009 to mid-2010 • Flash crash of May 6, 2010, nearly 1,000 DJIA point drop, high frequency trading controversies, setting of circuit breakers and role of Waddell & Reed mutual fund • MF global October 2011 collapse, CEO Jon Corzine’s speculative Euro sovereign Debt positions and commingling of client funds • Belgium-based SWIFT, US and European restrictions and restricting access for Iranian financial institutions to global interbank transfer networks in early 2012

Meet Your Expert Course Director Dr. John W. Dalle Molle is an independent financial market consultant specialising in quantitative credit, energy, market and operational risk management, analytics and modelling. Recently, he has been involved in model validation consulting projects with major Singaporean and Malaysian banks. He has presented executive educational and professional training programmes in Africa, the Americas, Asia-Pacific Region, South Asia, the Middle East, and various European countries. His clients include several large financial institutions and central banks. In the past, he has also taught at a number of renowned universities in Asia, Europe, and the Americas. Dr. Dalle Molle has also made several professional presentations around the world in conferences and exhibitions

+971 4 335 2437

+971 4 335 2438

www.iirme.com/tradingsystems

International Payments, Settlement And Trading Systems Best Practice And Current Developments

9 – 12 September 2012 • Radisson Royal Hotel, Dubai, UAE

FIVE WAYS TO REGISTER IIR Holdings Ltd. P.O Box 21743 Dubai, UAE

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DISCOUNTS AVAILABLE FOR 2 OR MORE PEOPLE CALL – +971 4 335 2483 E-MAIL – a.watts@iirme.com WEB BC4390

Event

Course Fee Before 24 June 2012

Course Fee Before 15 July 2012

Final Fee

International Payments, Settlement And Trading Systems 9 – 12 September 2012

US$ 3,895

US$ 4,395

US$ 4,695

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Course fees include documentation, luncheon and refreshments. Delegates who attend all sessions will receive a Certificate of Attendance.

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A confirmation letter and invoice will be sent upon receipt of your registration. Please note that full payment must be received prior to the event. Only those delegates whose fees have been paid in full will be admitted to the event. You can pay by company cheques or bankers draft in Dirhams or US$. Please note that all US$ cheques and drafts should be drawn on a New York bank and an extra amount of US$ 6 per payment should be added to cover bank clearing charges. In any event payment must be received not later than 48 hours before the Event. Entry to the Event may be refused if payment in full is not received. Credit card payment If you would like to pay by credit card, please tick here and a member of our team will contact you to take the details

Cancellation If you are unable to attend, a substitute delegate will be welcome in your place. Registrations cancelled more than 7 days before the Event are subject to a $200 administration charge. Registration fees for registrations cancelled 7 days or less before the Event must be paid in full. Substitutions are welcome at any time.

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Event Venue: Radisson Royal Hotel, Dubai, UAE Tel: +971 4 308 0000 Accommodation Details We highly recommend you secure your room reservation at the earliest to avoid last minute inconvenience. You can contact the IIR Hospitality Desk for assistance on: Tel: +971 4 407 2693 Fax: +971 4 407 2517 Email: hospitality@iirme.com