FMP 6. Central Clearing: LOs

a) Provide examples of the mechanics of a central counterparty (CCP).

b) Describe the role of CCPs and distinguish between bilateral and centralized clearing.

c) Describe advantages and disadvantages of central clearing of OTC derivatives.

d) Explain regulatory initiatives for the OTC derivatives market and their impact on central clearing.

e) Compare margin requirements in centrally cleared and bilateral markets and explain how margin can mitigate risk.

f) Compare and contrast bilateral markets to the use of novation and netting.

g) Assess the impact of central clearing on the broader financial markets.

h) Identify and explain the types of risks faced by CCPs.

i) Identify and distinguish between the risks to clearing members and to non-members.

FMP 7. Futures Markets: LOs

a) Define and describe the key features and specifications of a futures contract, including the underlying asset, the contract price and size, trading volume, open interest, delivery, and limits.

b) Explain the convergence of futures and spot prices.

c) Describe the role of an exchange in futures transactions.

d) Explain the differences between a normal and inverted futures market.

e) Describe the mechanics of the delivery process and contrast it with cash settlement.

f) Evaluate the impact of different trading order types.

g) Describe the application of marking to market and hedge accounting for futures.

h) Compare and contrast forward and futures contracts.