ICM133-Financial Markets and Instruments for Regulators

Module Provider: ICMA Centre
Number of credits: 20 [10 ECTS credits]
Level:7
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Current from: 2020/1

Email: a.dufour@icmacentre.ac.uk

Type of module:

Summary module description:

This module is for students studying the MSc in Regulation and Compliance (Degree Apprenticeship) only. 

This module begins with an overview of the trading industry and core elements of financial markets. It identifies key market participants and important market qualities: orderliness, transparency, efficiency, liquidity and stability. A framework for comparing alternative market structures is developed. The module introduces and discusses the main models for valuing financial assets and reviews properties and applications of sophisticated financial instruments such as futures and options. Finally, students are guided to reflect upon policy responses to the challenges created by anomalies and technological innovations which may lead to fragmentation, illiquidity, extreme events, excessive volatility and market abuse.  

Aims:

This module seeks to expose students to scholarly thought underpinning the varied topics within the broader heading of financial markets and financial instruments. The module will also aim to develop a deep appreciation of established and more current practices in the operation of markets and instruments, so that students are able to critically evaluate and challenge market practices acquiring essential skills for compliance officers and regulators. 

Assessable learning outcomes:

By the end of the module, students should be able to: 

• 
  

  Demonstrate an understanding of the theory and market practice of trading in financial markets. 

  
  


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  Understand why and to what extent markets need regulation in order to function efficiently. 

  
  


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  Understand the main ways in which market operations may lead to sub-op timal results or even market abuse. 

  
  


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  Appreciate the extent and variety of instruments and securities traded in modern markets. 

  
  

Additional outcomes:

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  Understand the structure of the programme (including how the apprenticeship and professional qualification are integrated with the academic content) 

  
  


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  Be aware of the nature of the assessments and best practice for essay writing and sitting exams. 

  
  

Outline content:

The module begins by covering the concepts required for looking at the motives, expected conduct and desired outcomes in orderly, efficient, stable markets. Anomalies, recent advances and the methods used to obtain competitive advantage are then examined so as to reflect upon the challenges of disorder, inefficiencies, extreme circumstances, excessive volatility and instability. This builds upon consideration of the primary and secondary markets, the main market participants and the key instr uments that are traded in the markets. This will be presented and discussed in the framework of defining the different types of markets in which financial instruments are traded including listed stock, bond and derivative markets and will also include study of the OTC markets. Policy responses to the challenges that regulators can reasonably expect firms and market participants to avoid or prevent will be discussed.  

There are eight core lectures supplemented by seminars and workshops: 

1. 
   

   Trading industry and key concepts 

   
   

2. 
   

   An introduction to trading and trading simulations 

   
   

3. 
   

   Market structures: Single-price call and continuous auctions 

   
   

4. 
   

   Trading book and market abuse: Case studies, detection and prevention 

   
   

5. 
   

   Asset pricing models  

   
   

6. 
   

   Derivatives and arbitrage 

   
   

7. 
   

   Liquidity, price discovery and high frequency trading