FX and Interest Rate Derivatives


  • Despite the financial crisis, banks and corporations still use currency and interest rate derivatives for hedging the exposures that arise in their day-to-day business. The excessive and irrational use of these instruments before the current financial crisis, however, reminds us that we need a really sound understanding of these instruments. The risks involved must be thoroughly understood before we start using derivatives.

Course objectives

The objective of the workshop is to acquaint participants with different kinds of basic financial derivatives and their valuation, and to provide practical tips for their use for hedging and trading. This warm-up seminar on derivatives will provide participants a general introduction to forwards, swaps, futures and options, and explain the advantages and disadvantages of an individual instrument. We will explain the link between the cash and futures markets, and the main characteristics, most important terms and basic mechanics of instruments. An overview of the organised derivatives and OTC markets will be presented with selected examples. Finally, we will give participants an overview and examples of the basic uses of derivatives for trading and hedging purposes.

Short video regarding the workshop

Who should attend

  • derivatives dealers
  • risk managers
  • treasurers
  • corporate treasurers
  • securities traders
  • account officers who advise their customers
  • accountants and auditors who wish to upgrade their knowledge about derivatives
  • back office personnel

Teaching methodology

    The workshop is intended for newcomers to the world of financial derivatives. It comprises a combination of lectures, discussions, case studies and practical workshops on the use of different FX and interest rate derivatives. Experience with derivatives is not required. However, a theoretical base in this area is welcome. In addition to the theoretical basics of derivatives, specific interesting solutions for day-to-day work will be addressed. Specific themes will move quickly and intensely from the basics of instruments to various operational aspects of their application. The course content is intended to provide participants an understanding that will be of immediate practical use in the workplace. The seminar is targeted towards those who wish to participate in the subsequent "Advanced financial derivatives" workshop.

    Participants are requested to bring a financial calculator (HP 17B or similar) for calculating practical examples and exercises. Only a minimal amount of calculus knowledge is required in order to master numerical analyses and examples during the workshop.

  • Course description

    Date: 20-21 February 2020

    Venue: Budapest, Danubius Grand Hotel Margitsziget

    The workshop is held in the English language.

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  • Course contents

    • Introduction to FX and money market
    • Introduction to derivatives market
      • what is a “derivative instrument”?
      • characteristics of derivatives
    • Why and how to use derivatives
    • How to start trading with derivatives
    • Exchange-traded versus Over-the-counter (OTC) derivatives
    • Currency derivatives
      • FX forward
      • FX swap
      • FX futures
      • FX option
    • Interest rate derivatives
      • Forward/Forward
      • Forward Rate Agreement (FRA)
      • Interest Rate Swaps (IRS)
      • Interest Rate Options
    • How to manage corporate exposures
    • Marketing derivative solutions
    • Basics of derivatives valuation
    • Cases of trading and hedging with derivatives