The purpose of this seminar is to give you a good introduction to financial derivative markets and instruments and an overview of the "mechanics" and applications of these instruments.

We start with an overview of derivatives and derivative markets and we explain the main characteristics of derivative instruments. We also explain the important differences in terms of liquidity, flexibility and counterparty risks between the two "market forms", listed and OTC, and we discuss the institutional and regulatory changes in the aftermath of the global financial crisis.

We then introduce and explain in turn the different types of instruments. We first look at futures and options. We define the instruments and we explain how they are traded and settled. We look at "live" examples of futures and options traded at the CME, Eurex and other exchanges. We also explain how the instruments are priced using standard pricing models such as "cost-of-carry" for futures and the "black-scholes" and numerical models for options. We also show how to calculate important risk analytics such as delta, gamma, vega, theta and rho, and we explain how these analytics should be interpreted.

We then introduce Interest Rate Swaps, FX forwards and Currency Swaps. In each case, we explain their time profiles, cash flows and trading and settlement mechanisms, and we give practical, real-life examples of their applications. We show how swaps are priced and valued using multiple yield curves and FX rates, and we explain how to assess their risks. We also present and analyze Caps, Floors, Swaptions and other types of interest rate options.

Further, we introduce and explain the mechanics of credit derivatives such as "credit default swaps", "total return swaps" and credit options. We also present and analyze a number of exotic derivatives such as Asian options, lookback options, barrier options, digital options and compound options. We explain the pay-off profiles of these options, and we give examples of their applications in trading, investing and risk management.

Finally, we explain how the risks of using derivatives can be measured and managed, and we discuss the (changing) regulatory requirements for using these instruments in banks, pension funds, investment funds and other institutions.