Course Code: 201

Duration: 2 days

Level: Intermediate

Fee: $1395.00

Instructor: Charlotte Scott

CPE Credits: 14

Prerequisite: Participants should have a basic understanding of equity and fixed income products.

This introductory program provides a comprehensive overview of Securities Operations and processing for the global markets. The program material is presented from the perspective of a U.S. participant (client, broker/dealer, or custodian) who trades or services non-U.S. securities. Local market practices are included for a sampling of foreign markets in the European, Pacific Rim and South American regions.

Day One

Products and Participants

The first day of the program begins with a presentation of the forms and types of foreign securities that are typically traded by U.S. market participants. Product categories encompass both equity and fixed income securities. The roles of direct and indirect market participants are explored in the context of the cross-border trade lifecycle. Participants include institutional clients, domestic and foreign broker/dealers, and global, sub and local custodians.

Order Flow and Securities Trading

• Market Structure:

• Foreign Stock Exchanges and OTC Markets

•  Order Systems Provided by Foreign Stock Exchanges and Trading Services for both Equity and Fixed Income Trades
•  SETS and SEAQ at the London Stock Exchange

• Foreign Ownership Limits and Restrictions
  
• Currency and Time-zone Considerations

Confirmation/Affirmation

• Confirmation Requirements for Cross-border Transactions
• Transaction Flow for Confirmation/Affirmation Activity
• Role of the Global and Local Custodian
• International Confirmation and Trade Matching Services:
  
  • Global OASYS, Omgeo, TradeWeb, SWIFT Messaging

Market-Side Comparison

• Local Trade Date Comparison Systems
• Pre-matching Services for Local Agents and Custodians

Clearance Systems and CCP's (Central Counter Parties)

• Structure of Local Clearing Houses:
• London Clearing House (LCH)
• ClearNet in France
• Japanese Securities Clearing Corporation (JSCC)
• Funding Requirements by Clearing Members 
• How Capital is Deployed by US Participants in Foreign Markets 
• Infrastructures that lack CCP's

Day Two

The second day of the program carries over the examination of the cross-border trade lifecycle with an intensive assessment of settlement, including local settlement infrastructures and the complexities of settling cross-border transactions.

Settlement

• Provisions for Local and Cross-border Exchange of Assets
• DVP vs Free of Payment
• Role of the Global Custodians and Sub-custodial Networks
• Local Centralized Securities Depositories:
• Crest
• Sicovam
• CBLC
• JASDEC

• International Depositories:
• Euroclear
• Clearsteam

• Cash Payment Systems and the FX Component of Settlement
• Safekeeping Methods and Procedures:
•  Nominee and Beneficial Owner Registration

• Failed Trades and Associated Penalties, Close-out and Buy-in Procedures

Cash Management

• Financing Requirements for International Trading
• Foreign Exchange Trade Lifecycle
• Nostro Account Considerations
• Correspondent Banking Arrangements

International Securities Lending and Financing

• Structure of an International Stock Borrow/Loan Transaction
• Local Market Practices for the Exchange of Securities and Collateral
• International Repo Financing
• International Lending Agreements
• Risk/Reward Scenarios

Asset Services

• Dividend and Interest Distribution
• Benefit Events Including Coupon Payments, Dividends, and Bonus Issues
• Calculation of Beneficiary Entitlement
• Tax on Benefits
• Payment Cycles and Methods

• International Corporate Actions
• Capital Changes and Reorganizations
  
• Shareholder Meetings
  
• Takeovers and Mergers
  
• Issues Associated with Voting Rights Held by Foreign Investors

Risk in Processing International Securities Transactions

• An examination of the Various Types of Risk Inherent in International Securities Transactions, including but not limited to:
• Operational
• FX
• Interest Rate
• Credit
• Counterparty
• Legal and Regulatory
• Sovereign

• Methods for Managing Risk in Cross-border Securities Activity