Programme Content Part 2
Part 2 - Compulsory Modules:
- Compliance - Theory and Practice
Part 2 - Optional Modules:
A choice of 80 credits from:
Enterprise Valuation - Ethics in Finance
- Financial Regulation and Regulatory Policy
- International Securities Markets
- Real Estate Finance
- Research Project
- The Principles of Islamic Commercial Jurisprudence and the Nominate Contracts
- Topics in the History of Finance *
- A selection of relevant modules from the School of Law is made available on an annual basis
* Please note that at this time those modules with asterisks against them are not available on a distance learning basis.
Part 2 Compulsory Modules
Compliance - Theory and Practice
Convenor: Deepa Govindarajan
Number of credits: 20
Aims:
Having studied the practical workings of regulation in the Capital Markets (Regulation of Markets and Traders), this course focuses on the deeper study of both the practice of 'compliance' within the markets and institution; and the theoretical issues that arise in those contexts.
Intended learning outcomes:
Assessable outcomes:
By the end of the module, it is expected that students will have gained an understanding of compliance in both theory and practice. Specifically students will have an in depth understanding, and will learn best practices regulatory compliance with: Avoidance of conflicts of interest; Retail Challenges including Churning, Unauthorized trading, Suitability; Supervision; Branch Office Management; Anti Money Laundering; Insider Trading; Regulatory Inquiries and Conducting Internal Investigations; Surveillance.
Outline content:
- Principles-based versus Rule-based regulation
- Conflicts of interest
- Prudential/systems and controls regulation
- The regulation of individuals
- European Single Market in financial services
- Enforcement
- Global standards
- The Compliance function.
Part 2 Optional Modules
Commodity Derivatives
Convenor: Konstantina Kappou
Credits: 10
Aims:
This module aims to provide students with a detailed knowledge of the Commodity Derivatives Markets. It examines the aspects of pricing and trading physical derivatives and their complexity relative to financial derivatives, with emphasis on the Energy (Oil) and Shipping (Freight) sectors
Outline Content:
- Introduction to Commodity Markets, History and Evolution
- Precious Metals. Energy Products. Soft Commodities
- Main Market Players and Foward Curve. Basis Risk
- Commodity Derivatives. Exchanges and OTC transactions
- The Oil Market and its Mechanisms. OPEC and DOE. Crude Supply and Demand. Inventories
- Crude Products and Crack Spreads
- Refineries and Margins
- The Freight Market and its Mechanisms. The Baltic Exchange and the Shipping Industry. Forward Freight Agreements.
- Pricing of Commodity Derivatives - Swaps, Options and Structured Trades
- Trading Techniques and Numerical Examples
Ethics in Finance
Convenor: Carol Padgett
Credits: 10
Aims:
Introduces different schools of ethics and provides the framework needed to identify ethical and non-ethical responses to choices faced in the finance industry. Investigates the ethical standards imposed by financial regulators. Identifies the ethical dimension involved in the decision-making process and the conflicts between economic efficiency and ethical behaviour.
Outline Content:
Lectures:
- Introduction to ethics
- Regulation in financial markets
- Socially responsible investment
- Insider dealing
- Corporate governance
- Mergers and acquisitions
Seminars:
- Regulation: Enron
- Screening and “ethical” portfolios
- Insider dealing: ImClone
- Bankruptcy: WorldCom case
- Hostile takeovers: Comcast and Disney
- Vasiek's short rate model
- Market calibrated short rate models of Ho / Lee and Hull - White
- Valuation of interest rate products.
Financial Regulation and Regulatory Policy
Convenor: Richard Dale
Credits: 10
Aims:
This module aims to provide both a theoretical basis for financial regulation and a description of its practical application. The focus is on prudential regulation that is designed to maintain systemic stability while also protecting depositors, investors and counterparties in banking, securities and derivatives markets. The module explores a number of key regulatory policy issues, including the balance between official and self-regulation, the nature and scope of ‘moral hazard’ in financial markets and alternative approaches to capital adequacy assessment.
Outline Content:
Topic 1: The objectives, techniques and scope of financial regulation. The moral hazard issue. Preventive versus protective regulation.
Topic 2: Preventive regulation. Capital adequacy: the 1988 Basle Accord, the 1997 Market Risk Amendment and the EU Capital Adequacy Directive.
Topic 3: Alternative approaches to capital adequacy assessment: the 1999 Basle proposals, the pre-commitment approach and the use of market indicators (credit ratings and subordinated debt).
Topic 4: Protective regulation: deposit insurance and the lender of last resort.
Topic 5: The separation issue: the regulatory interface between banking and securities business: Regulating financial conglomerates.
Topic 6: Risk and regulation in derivatives markets.
Topic 7: isk and regulation in payments, clearing and settlement systems.
Topic 8: The structure of financial regulation.
Topic 9: International regulatory co-operation.
Topic 10: Anatomy of a crisis: the Asian debt crisis and its regulatory implications.
International Securities Markets
Convenor: John Evans
Credits: 10
Terms in which taught: Spring
Aims:
International Securities Markets applies general valuation risk assessment methods to: fixed income securities, derivatives and markets. It describes the basic characteristics of each fixed-income security, cash and underlying, and develops practical strategies for finding its value and assessing its risk. It also considers how the markets for these securities are related and begins the task of showing how these relationships can be exploited for trading or investment.
The analytical techniques introduced in this module are applied to allow the successful candidate to apply directly to industry the more theoretical market valuation and risk models learned in other core modules taken in the first term.
Outline Content:
- Topic 1 - Fixed Income Analysis.
- Topic 2 - Fixed Income Analysis.
- Topic 3 - Rates Trading and Hedging I.
- Mid-term test 1
- Topic 4 - Rates Trading and Hedging II.
- Topic 5 - Credit Analysis and Products I.
- Topic 6 - Credit Analysis and Products II.
- Mid-term test 2
Real Estate Finance
Convenor: Charles Ward
Credits: 10
Aims:
Aims to apply some key corporate finance issues using real estate as the core example. Examines what makes real estate different, why companies are selling it and how it is affected by mergers and take-overs. Real estate is one of the most important assets held by companies, it is used as security for more debt than any other asset, widely used in leasing transactions yet hardly figures in any corporate finance textbook.
Research Project
Convenor: Charles Sutcliffe
Credits: 20
Aims:
The aim of the research project is to allow students to define and execute a piece of research in finance on a topic of their choice, with direction from an academic supervisor and with assistance from a doctoral student support supervisor.
Outline Content:
The self-directed nature of study for this model should encourage students to be resourceful in their search for relevant literature and data, and to manage the various stages involved effectively, leading to timely submission of the finished piece.
The Principles of Islamic Commercial Jurisprudence and the Nominate Contracts
Convenor: INCEIF Faculty
Credits: 10
Aims:
Provides students with the opportunity to study the juristic basis of Islamic finance, and the nominate contracts that are set out in Islamic commercial jurisprudence (the Fiqh al Muamalat).
Outline content:
- The origins of Islamic commercial jurisprudence
- Prohibitions to be respected in order for Islamic contracts to be valid:
- Avoidance of riba (pure return on money), maysir (speculation), and gharar (uncertainty or ambiguity of subject matter) - The frequently used nominate contracts
- Overview of Islamic financial products and their basis in nominate contracts (see Module 255)
- Shari'ah governance of Islamic financial institutions
- The IFSB Guidelines on Shari'ah governance
Topics in the History of Finance*
Convenor: Adrian Bell
Credits: 10
Aims:
This module aims to provide students with an understanding of the origins of Financial Markets, and with a broader appreciation of the early development of products and innovations in Finance – which many assume are recent twentieth century inventions.
