But one lesson from the 2007 banking and 2010 euro crises is that computer driven models can be so complex that investors may not interpret their results correctly. Returning to first principles, we therefore explain why Global Financial Trading & Risk Management is only a guide to action and program trading is no substitute for human judgement. Investors should always understand the models that underpin their analyses.
One factor which is significantly affected by such governance is that of risk assessment and management. Good governance reduces risk and facilitates its management. This is the focus of this course.
A spot deal is a deal done now (T+0 days) for settlement now. “Now” means the earliest date dictated by market convention. For example, in the money market a Treasury bill sale transacted on T+0 can be settled today (T+0) or tomorrow (T+1). In the bond market deals are done on T+0 and usually settled on T+3. In spot deals and derivative deals the price is agreed on T+0, but settlement dates are different: spot deals are settled “now” and derivative in the future (eg. T+180). Derivatives are used for hedging, speculation and investment.