Module 7 - Treasury and Money Market Operations Flashcards
Refer to the buying and selling of government securities, lending/borrowing against underlying assets as collateral, accepting of fixed term deposits, and other monetary instruments of BSP aimed at influencing the underlying demand and supply conditions for money.
Money operations
refers to the Bangko Sentral’s monetary instrument where the Bangko sentral sells government securities with a commitment to buy them back at a later date.
Reverse Repurchase Agreements
is a bangko sentral standing facility which allows counterparties to obtain overnight liquidity from the Bangko Sentral on an open-volume basis against eligible collateral.
Overnight Lending Facility
is a bangko sentral standing facility which allows banks to place overnight deposits with the bangko sentral.
Overnight Deposit Facility
is a key liquidity absorption facility of the Bangko Sentral used to withdraw liquidity from the system in bulk.
Term Deposit Facility
may be a significant source of operational risk, apart from giving rise to market, liquidity and credit risks.
treasury activities
refer to debt and equity securities, hybrid securities, derivatives, securitization structures and similar products with substantial investment characteristics.
Financial products
a person engaged in the business of buying and selling securities for the account of others.
Broker
a person who buys and sells securities for own account in the ordinary course of business.
Dealer
refer to financial products whose terms, features and risks are not reasonably likely to be understood by a non-sophisticated client because of their complex structure
Complex products
funds or amount of exposure to be hedged.
Investment amount
the client’s financial standing, which includes information on assets, net worth, financial commitments, regular income and capacity tio withstand losses.
Financial situation
the client’s knowledge and understandfng of the financial markets and products and the risks involved therein.
Knowledge of financial products
the nature of investments and/or derivatives transactions undertaken by the client.
Investment/hedging experience
the client’s goal or purpose for entering into a transaction, whether it be for regular income, capital appreciation, capital preservation, maintenance of purchasing power, hedging as against investment.
Financial objectives
the client’s goal or purpose for entering into a transaction, whether it be for regular income, capital appreciation, capital preservation, maintenance of purchasing power, hedging as against investment.
Financial objectives
the level of risk a client is willing to take
Risk appetite
the length of time over which the position or exposure to be hedged will be held by the client.
Holding period/investment horizon
prohibitions or limitations imposed on the activity of the client by existing laws, rules and regulations
Regulatory and legal constraints
the client’s need to convert positions into cash and the timing of such requirement.
Liquidity needs
refers to any financial institutions, only with respect to the instruments in which it is authorized to engage as a broken dealer.
Market counterparty
refers to an institution that is not a market counterparty but has the level of net worth, knowledge, expertise, and experience to deal with the financial products.
Sophisticated institutional client
refers to an individual who has demonstrated to the BSFI that he has the level of net worth, knowledge, and experience to deal with financial products.
Sophisticated individual client
refer to all other institutional or individual clients not categorized as market counterparty, sophisticated institutional client or sophisticated individual client.
Other clients
client prefers an investment and/or hedging strategy where the primary goal is to prevent the loss of principal.
Conservative
client is willing and able to expose funds to a moderate level of risk in consideration for higher returns or to meet certain objectives.
Moderate
client is willing and able to accept higher risks involving volatility of return and even possible loss of investment in return for potentially higher long term results.
Aggressive
is a broadly defined as a financial instrument that primarily derives its value from the performance of an underlying variable.
Derivative
shall also include transactions in cash instruments with embedded derivatives that reshape the risk-return profile of the host instrument.
Financial derivatives activities
is defined as a financial market participant that enters, for its own account, in a derivatives transaction for legitimate economic purposes.
end-user
refers to any UB or KB, only with respect to the instruments for which it is authorized to engage in as a dealer.
Market counterparty `
refers to an institution which is not a market counterparty and has the level of net worth, knowledge, expertise, and experience to deal with financial derivatives.
Institutional counterparty
refers to an individual who has demonstrated to the bank as having the level of net worth, knowledge and experience in dealing with financial products.
sophisticated individual end user
This refers to all other institutional or individual clients not categorized as market counterparty, institutional counterparty, or sophisticated individual end user.
other end user
is a financial market participant that facilitates a derivatives transaction between a dealer and it’s client
broker
is defined as a financial market participant that engages in a derivatives activity as an originator of derivatives products or as market-maker in derivatives products.
dealer
refers to a financial contract between two parties, the protection buyer and protection seller.
Credit default swaps
refers to a pre-funded credit derivative instrument under which the note holder affectively accepts the transfer of credit.
-Credit linked note
refers to an arrangement in which two parties exchange a series of cash flows.
Currency swaps
refers to an agreement for delayed delivery of a foreign currency in which the buyer agrees to purchase and the seller agrees to deliver.
Forward FX contracts
refers to an agreement fixing the interest rates for a specified period whereby the buyer receives (or pays) and the seller pays (or receives) the interest rates…
Forward rate agreement
refers to FX risk
FX exposure
refers to an actual FX commitment
FX obligation
refers to option contracts
FX options
refers to an agreement involving an initial exchange
FX swaps
refers to an agreement in which the parties agree to exchange interest cash flows …
Interest rate swaps
