Foreign Exchange Operations: Master Trading Agreements, Settlement, and Collateral: 642 (Wiley Finance) - Hardcover

DeRosa, David F.

Hardcover

ISBN 10: 0470932910 ISBN 13: 9780470932919

Publisher: Wiley, 2013

Synopsis

The ultimate nuts-and-bolts guide to foreign exchange operations

The foreign exchange landscape is particularly risky since so much of the world is unregulated and takes place over the counter (off exchange). Brilliant traders and money managers who are profitable may find themselves underperforming, or worse, losing, simply because they failed to establish strong operations. In this book, David DeRosa provides industry players with everything they need for strong operational functions from all the types of trades to execution, master trading agreements, documentation, settlement, margin and collateral, and prime brokerage services.

• Contains vital work flow solutions for trading in the volatile foreign exchange marketplace
• Offers information for mastering the operational aspect of foreign exchange trading to help determine best partners such as prime brokers and others
• Written by David DeRosa a leading foreign exchange expert who has consulted to hundreds of financial institutions

Foreign Exchange Operations helps traders mitigate risks and offers a guide to all aspects of trading operations from mastering trading agreements to margin documentation.

About this title

About the Author

David F. DeRosa is President of DeRosa Research and Trading, Inc., a firm that conducts research into derivatives pricing, macroeconomics, monetary policy, and foreign exchange. He is an adjunct associate professor of finance at the Fu Foundation School of Engineering and Applied Science at Columbia University where he teaches courses in pricing models in financial engineering. David sits on the boards of several prominent hedge fund groups. He is the author of many books including Options on Foreign Exchange (Wiley), Central Banking and Monetary Policy in Emerging-Markets Nations, and In Defense of Free Capital Markets. David received his PhD in finance and economics from the Graduate School of Business of The University of Chicago, and his BA in economics from the College of The University of Chicago. Before founding DeRosa Research, he worked on Wall Street as a foreign exchange trader, hedge fund trader, and portfolio manager.

From the Back Cover

The volumes traded on the international foreign exchange market are huge, exceeding $4 trillion daily, far surpassing those of all other portions of the international capital market. Yet there is surprisingly little written to help professionals who want to learn about foreign exchange and to gain proficiency in the mechanics of trading in this important market. Even less has been written to explain the mechanics of foreign exchange operations, how money flows, and how the settlement process works.

Traders, operations personnel, hedge fund managers, investment bankers, financial managers, attorneys, and financial regulators will all find this volume indispensable for understanding what happens behind the scenes between the execution of a trade and its settlement.

David DeRosa, a veteran of financial markets, explains how the foreign exchange market conducts trading and operations. He addresses the practical considerations of how market participants contract with one another to do trading and operations, conduct margin and credit, and undertake foreign exchange prime brokerage services.

DeRosa’s work is immensely practical. Understanding the operations process helps control costs, minimize errors, and to some extent preclude fraud. DeRosa’s explanation of operational conventions and their development also reveals the story of how the foreign exchange market grew and developed over the last four decades: a largely ignored but important corner of financial history.

Foreign Exchange Operations walks the reader through all practical aspects of foreign exchange operations, from trade execution to documentation to trade confirmation. It focuses on the processes by which foreign exchange trades are settled using real time gross settlement systems. The later chapters focus on the legal and financial superstructure of the market, including master agreements, margin and collateral practices, and foreign exchange prime brokerage. DeRosa provides concrete examples to illustrate market practice, including more than 100 exhibits that contain real-world examples of trades, confirmations, settlement instructions, and other key documents.

Some of the main topics include:

• The structure of the foreign exchange market
• Quotation and trading conventions
• Currencies, exchange rates, and exchange rate controls
• Foreign exchange deals, including spot, forward, and non-deliverable forwards
• Foreign currency options, both vanilla and exotic options
• How foreign exchange trades are executed and confirmed
• Trade settlements, including payment systems, DTNS, RTGS, and CLS Bank
• Master agreements―the primary contracts that bind counterparties
• Uses of credit, margin, and collateral in foreign exchange trading
• Foreign exchange prime brokerage

From the Inside Flap

The volumes traded on the international foreign exchange market are huge, exceeding $4 trillion daily, far surpassing those of all other portions of the international capital market. Yet there is surprisingly little written to help professionals who want to learn about foreign exchange and to gain proficiency in the mechanics of trading in this important market. Even less has been written to explain the mechanics of foreign exchange operations, how money flows, and how the settlement process works.

Traders, operations personnel, hedge fund managers, investment bankers, financial managers, attorneys, and financial regulators will all find this volume indispensable for understanding what happens behind the scenes between the execution of a trade and its settlement.

David DeRosa, a veteran of financial markets, explains how the foreign exchange market conducts trading and operations. He addresses the practical considerations of how market participants contract with one another to do trading and operations, conduct margin and credit, and undertake foreign exchange prime brokerage services.

DeRosa’s work is immensely practical. Understanding the operations process helps control costs, minimize errors, and to some extent preclude fraud. DeRosa’s explanation of operational conventions and their development also reveals the story of how the foreign exchange market grew and developed over the last four decades: a largely ignored but important corner of financial history.

Foreign Exchange Operations walks the reader through all practical aspects of foreign exchange operations, from trade execution to documentation to trade confirmation. It focuses on the processes by which foreign exchange trades are settled using real time gross settlement systems. The later chapters focus on the legal and financial superstructure of the market, including master agreements, margin and collateral practices, and foreign exchange prime brokerage. DeRosa provides concrete examples to illustrate market practice, including more than 100 exhibits that contain real-world examples of trades, confirmations, settlement instructions, and other key documents.

Some of the main topics include:

• The structure of the foreign exchange market
• Quotation and trading conventions
• Currencies, exchange rates, and exchange rate controls
• Foreign exchange deals, including spot, forward, and non-deliverable forwards
• Foreign currency options, both vanilla and exotic options
• How foreign exchange trades are executed and confirmed
• Trade settlements, including payment systems, DTNS, RTGS, and CLS Bank
• Master agreements—the primary contracts that bind counterparties
• Uses of credit, margin, and collateral in foreign exchange trading
• Foreign exchange prime brokerage

Edition details

• Publisher: Wiley
• Publication date: 2013
• Language: English
• ISBN 10: 0470932910
• ISBN 13: 9780470932919
• Binding: Hardcover
• Edition number: 1
• Number of pages: 416