Discover the Trade Life Cycle and learn how Trading Firms operate.
- 1. Intro: What is commodity trading?
- 2. Pre-trade: What needs to be done before signing a contract?
- 3. Trade is signed: Who steps in now?
- 4. Trade execution: Who executes the trade?
- 5. Trade settlement: What are the remaining steps?
Get an overview of all the different functions within a commodity trading company.
- Be able to speak confidently about how the commodity market is changing and what challenges commodity traders are facing in the current market.
- Understand how commodity traders make profits and where potential opportunities lie.
- Have a basic grounding in what space, time and transformation arbitrages are currently occurring in soft commodities.
- Even if you work in a commodity trading company, all pieces of the puzzle are explained and you will understand better the other roles and how you fit in.
This session will include interactive exercises, practical case studies and tips from the field!
Table of content
PART 1: What is commodity trading? (2h30)
– Soft Commodity Trading Jargon Buster
– Geneva as a Commodity Trading Hub
– Basics of Commodity Pricing – Commodity Pricing Mechanism
– Supply and Demand – Demand and Supply Driven
– Basis Risk and Pricing Forwards, Futures and Swaps
– ICE Nymex and the Exchange, Price Discovery, Forward Curves
– OTC products versus Exchange Traded vrs Clearport
– Options and their structures
– Commodity Assets – Upstream
– Commodity Assets – Midstream
– Commodity Assets – Downstream
– Commodity Trading Company Structures
– The Future for Commodity Trading Companies
PART 2: Pre-trade and Contract Negotiation (Including risks) – 2h30
– Role of Trader – Arbitrage in Space
– Role of Trader – Arbitrage in Time – Contango Markets
– Role of Trader – Arbitrage in Time – Backwardation Markets
– Role of Trader – Transformation Arbitrage
– Role of Trader – Physical Trading
– Role of Trader – Paper Trading
– Role of Trader – Option Trading Strategies
– Role of Trader – Liquidity Risk Facing Commodity Traders
– Bush to Fob Margin – Asset Plays
– CIF to Shelf Margin – Marketing and Asset Plays
– Price Risk – Management of Risk
– Counterparty Risk
– Political and Legal Risk
PART 3: Contract is signed, trade confirmation (PnL, credits, liquidity management, operations) – 1h00
– Traders Role – Common Problems
– Contractual Agreements – Different Trading Terms
– Shipping Documents – Bills of Lading and LOIs
– Operational Risk Quality and Quantity Risk
– Payment Terms – Letters of Credit, CAD and CIA
– Accounting – Liquidity Management on Paper and Physical Trades
– Managing Credit Exposure
PART 4 – Trade Execution (logistics, payment, etc.) – 1h00
– Operators role – Common Problems
– Land Transport
– Chartering and Ocean Freight
– Terminal Port issues and agents
– Insurance Risk
PART 5: Post Trade (accounting, tax, finance, etc.) – 45
– Basel III and Effects on Commodity Trading Companies
– Customer Financing Agreements
– Disputes and Arbitrations – RSA and Gafta
– Financing in a Commodity Trading Company
– Position Limits and VARs
At the end of the course, attendees who achieve a score of 75% or higher will receive an AW Academy certificate from Ampersand World. This internationally recognised certification is aimed at those wanting to enter the world of trading and professionals seeking to boost their knowledge in this field.