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For all questions related to CIRO’s Proposed Proficiency Model, please visit CIRO’s webpage or email proficiency@ciro.ca.

What will you learn about?

  • Derivatives: what they are and where they trade
  • Key differences between exchange-traded and over-the-counter products
  • Exchange-traded options, pricing, hedging, speculating
  • OTC options like caps, floors, collars and exotics
  • Swaps including basic features, role of the swap dealer, and types
  • How investment funds and structured products use derivatives
  • The function of exchanges and clearinghouses
  • Futures contracts (basic features, types, pricing, hedging, speculating)
  • OTC forwards and other futures contracts
  • The inherent risks and the need for monitoring and controls

What is the course syllabus?

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Section 1 - An Overview of Derivatives

Chapter 1 - An Overview of Derivatives

Topics covered in this chapter are:

  • What Is a Derivative?
  • Common Features of All Derivative Instruments
  • Types of Derivative Instruments
  • Key Differences Between Option-Based and Forward-Based Derivatives
  • Exchange-Traded and Over-the-Counter Derivatives
  • Key Differences Between Exchange-Traded and Over-the-Counter Derivatives
  • Types of Underlying Interests
  • Commodities
  • Financials
  • Why Are Derivatives Useful?
  • Operational Considerations
  • Who Uses Derivatives and to What Extent Are They Used?

Section 2 - Futures Contracts

Chapter 2 - Introduction to Futures Contracts

Topics covered in this chapter are:

  • What Is a Forward-Based Derivative?
  • Types of Forward-Based Derivatives
  • Key Differences Between Exchange-Traded and OTC Forward-Based Products

Chapter 3 - Basic Features of Forward Agreements and Futures Contracts

Topics covered in this chapter are:

  • A Brief Overview of Forward-Based Derivatives
  • A History of Forwards
  • What Is a Forward Agreement?
  • What Is a Futures Contract?
  • Organized Futures Markets
  • Buying and Selling a Futures Contract
  • Cash Settlement
  • Margin Requirements and Marking-to-Market
  • Futures Trading and Leverage
  • Reading a Futures Quotation Page
  • Contract Size and the Value of the Underlying Interest

Chapter 4 - Exchanges and Clearinghouses

Topics covered in this chapter are:

  • Futures Exchanges
  • Futures Exchange Functions
  • Clearinghouses
  • Clearinghouse Functions

Chapter 5 - Pricing of Futures Contracts

Topics covered in this chapter are:

  • A Brief Overview of Futures Pricing
  • Futures Market versus Cash Market
  • Cost of Carry
  • Basis
  • Cash and Carry Arbitrage
  • Reverse Cash and Carry Arbitrage
  • Conditions that Facilitate Arbitrage
  • Inverted Markets
  • Convergence

Chapter 6 - Hedging with Futures Contracts

Topics covered in this chapter are:

  • Hedging
  • Types of Hedges
  • Imperfect Hedges
  • Optimal Hedge Ratio

Chapter 7 - Speculating with Futures Contracts

Topics covered in this chapter are:

  • What Attracts Speculators?
  • Types of Speculators
  • Price Forecasting Techniques
  • Fundamental Analysis
  • Technical Analysis

Chapter 8 - Interest Rate Futures

Topics covered in this chapter are:

  • Overview of interest rate futures
  • What Is an Interest Rate Futures Contract?
  • Bond and Note Futures
  • Money Market Interest Rate Futures
  • Pricing of Interest Rate Futures
  • Pricing of Money Market Interest Rate Futures
  • Applications for Interest Rate Futures

Chapter 9 - Equity Futures

Topics covered in this chapter are:

  • Stock Index Futures
  • What Are Equity Futures Contracts?
  • Pricing of Equity Futures
  • Equity Futures Applications

Chapter 10 - Currency Futures

Topics covered in this chapter are:

  • Foreign Exchange Markets
  • Pricing of Currency Futures Contracts
  • Currency Futures Applications

Chapter 11 - Over-the-counter Forwards and Other Futures Contracts

Topics covered in this chapter are:

  • Forwards versus Futures
  • Forward Rate Agreements
  • Forward Exchange Agreements
  • Contracts for Differences (CFDs)
  • Weather Derivatives
  • Volatility Derivatives

Section 3 - Exchange Traded Options

Chapter 12 - Introduction to Option-Based Contracts

Topics covered in this chapter are:

  • What Is an Option-Based Derivative?
  • Types of Option-Based Contracts
  • Similarities Between Options and Forwards
  • Key Differences Between Options and Forwards

Chapter 13 - Basic Features of Options

Topics covered in this chapter are:

  • The History of Options
  • Key Option Terminology and Definitions
  • Application of Key Terms and Definitions
  • Why Investors Buy Options
  • Why Investors Write Options
  • Other Related Benefits of Options
  • Advantages of Exchange-Traded Options versus Over-the-Counter Options
  • Reading Option Quotations
  • Common Questions Pertaining to the Options Market

Chapter 14 - Pricing of Options

Topics covered in this chapter are:

  • Pricing of Options
  • Major Factors that Affect the Price of an Option
  • Intrinsic Value
  • Time Value
  • Delta

Chapter 15 - Basic Option Strategies

Topics covered in this chapter are:

  • Exchange-Traded Options Strategies
  • Bullish Option Strategies
  • Bearish Option Strategies
  • Other Option Strategies

Chapter 16 - Non-Equity Exchange-Traded Options

Topics covered in this chapter are:

  • Non-Equity Options
  • Stock Index Options
  • Foreign Currency Options
  • Options on Futures
  • A Last Word on Non-Equity Options

Chapter 17 - Over-the-Counter Options

Topics covered in this chapter are:

  • Over-the-Counter Interest Rate Options
  • Interest Rate Caps
  • Interest Rate Floors
  • Interest Rate Collars
  • Exotic Options

Section 4 - Swaps

Chapter 18 - Introduction to Swaps

Topics covered in this chapter are:

  • Overview of the Swap Market
  • What Is a Swap?
  • Role of the Swap Dealer
  • History of Swaps
  • OTC Derivatives Market Reform

Chapter 19 - Interest Rate Swaps

Topics covered in this chapter are:

  • Plain Vanilla Interest Rate Swap
  • A Note on Rate and Day Count Conventions
  • The Structure of an Interest Rate Swap
  • Pricing an Interest Rate Swap
  • Indication Pricing Schedule
  • Credit Risk
  • Terminating an Interest Rate Swap
  • Why are Interest Rate Swaps Used?
  • Deliverable Interest Rate Swap Futures and Centrally Cleared Swaps
  • Other Types of Interest Rate Swaps
  • Swaptions

Chapter 20 - Currency Swaps

Topics covered in this chapter are:

  • The Structure of a Currency Swap
  • Currency Swaps as a Portfolio of Fixed- and/or Floating-Rate Bonds
  • Pricing of Currency Swaps
  • Reasons for Currency Swaps

Chapter 21 - Credit Swaps

Topics covered in this chapter are:

  • Credit Derivatives
  • The Role of Credit Derivatives
  • The Structure of Credit Default Swaps (CDSs)
  • What are Index CDSs?
  • Why are CDSs and Index CDSs Used?

Chapter 22 - Other Types of Swaps

Topics covered in this chapter are:

  • Equity Swaps
  • Commodity Swaps

Section 5 - How Investment Funds and Structured Products Use Derivatives

Chapter 23 - Mutual Funds

Topics covered in this chapter are:

  • Regulatory Framework for Canadian Investment Funds and Structured Products
  • Use of Derivatives in Mutual Funds
  • Risks of Derivatives Use by Mutual Funds

Chapter 24 - Alternative Mutual Funds, Closed-End Funds, and Hedge Funds

Topics covered in this chapter are:

  • Use of Derivatives by Alternative Mutual Funds and Closed-End Funds
  • Alternative Investments and Alternative Strategies
  • Hedge Funds Compared to Alternative Mutual Funds
  • Types of Alternative Strategies
  • Advantages and Disadvantages of Derivatives

Chapter 25 - Principle protected Notes (PPNs)

Topics covered in this chapter are:

  • Principal-Protected Notes (PPNs) – What Are They?
  • PPN Structures and the Use of Derivatives
  • CPPI and Zero-Coupon Bond Plus Call Option Structures – Key Differences

Chapter 26 - Derivative Based ETFs

Topics covered in this chapter are:

  • Introduction
  • Commodity ETFs
  • Swap-Based ETFs and the Synthetic Replication of Indexes
  • Leveraged and Inverse ETFs

Section 6 - Operational Considerations

Chapter 27 - Risk Assessment, Valuation and Monitoring

Topics covered in this chapter are:

  • Derivatives – Friend or Foe?
  • Types of Risks Associated with Derivatives
  • Measuring Risk
  • Internal Control and Monitoring
  • The Amaranth Debacle

Chapter 28 - Accounting, Disclosure and Taxation

Topics covered in this chapter are:

  • Accounting
  • Financial Reporting and Disclosure
  • Taxation

How will you learn?

CSI’s online learning system helps you meet your study goals. You’ll benefit from:

  • Textbook readings available in PDF, eBook and printed format
  • Course materials accessed through your computer, laptop, tablet, or phone, or by downloading the e-book for offline reading
  • Online interactive exercises and practice quizzes
  • Annual course updates to ensure you’re learning the most current and up-to-date practical material
  • An online study planner that shows you how to complete your studies in a 3-, 6-, 9-, and 12-month window
  • Access to online discussion forums and assistance from CSI’s academic support specialists

Course Completion, Wall Certificate and Digital Badge

Upon successfully completing this course, you will be able to download a Notice of Course Completion available through your student profile. This will remain on your profile as formal confirmation of course completion.

You can also accept a digital badge through your student profile after successful course completion. Digital badges are portable image files that allow you to share your credentials across the web. You can post them to your email signature, personal website, social media channels—even to electronic copies of your resume.

CSI will mail you a wall certificate within 4 – 6 weeks of course completion. Frames to display your certificate are available. Please ensure that your First and Last Name on your profile matches your First and Last Name on your Government Issued Photo identification – this will ensure you receive an accurate certificate.

CSI will be pleased to issue an Honours Certificate to all students who obtain a final course mark of 85% or higher.

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