This unit applies to a range of financial product trading job roles in the financial markets sector.

ELEMENT

PERFORMANCE CRITERIA

1. Hedge financial transaction

1.1. Financial data is reviewed to determine if financial product requires hedging before entering into transaction

1.2. Own risk profile and tolerance is determined prior to hedging and hedging instrument choices are selected that will be entered into to assist the transaction

2. Enter hedge transaction into organisational system

2.1. Counterparty approval is gained and confirmed before entering into hedge transaction and new hedge deal is transacted with counterparties in accordance with organisational guidelines, credit and other desk limits

2.2. Hedge transactional details are collected and relevant documentation is completed and hedge transaction is entered into the organisation dealing system

3. Evaluate financial position

3.1. Profit and loss reports are compared between back office and independent valuations to determine value of transactions

3.2. Organisational processes for accepting and signing independent back office valuations are completed

4. Adjust financial position

4.1. Current hedge position is analysed in line with profit and loss reports and new market data available, using standard market data

4.2. Counterparty approval is gained and confirmed before entering into hedge transaction and new hedge deal is transacted with counterparties in accordance with organisational guidelines, credit limits and other desk limits

4.3. Hedge transactional details are collected and relevant documentation is completed and the hedge transaction entered into the organisation dealing systems

Required skills

well-developed communication skills to:

determine and confirm counterparty and organisational requirements, using questioning and active listening as required

liaise with team members and peers, share information, listen and understand

use language and concepts appropriate to cultural differences

numeracy and IT skills to:

follow organisational transaction processes

use dealing systems

use internet information

highly developed research and analysis skills for:

accessing, interpreting and managing complex information

identifying gaps in information and gathering necessary information from alternative sources

well-developed literacy skills to:

read and interpret market information

identify economic environmental factors which affect financial services and markets

judgement skills for making financial decisions in complex situations and meet organisational transaction limits

organisational skills, including the ability to:

plan and sequence own work

work effectively in a constantly changing environment

self-management skills for complying with ethical, legal and procedural requirements

Required knowledge

financial risk analysis techniques

financial markets reports including profit and loss reports

organisational requirements relating to financial trading

organisational transactions limits

the economic environment, including:

characteristics and impacts of economic and business cycles

government monetary and fiscal policies

interest rates, exchange rates and inflation

the range of financial markets products available

The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package.

Overview of assessment

Critical aspects for assessment and evidence required to demonstrate competency in this unit

Evidence of the ability to:

hedge financial transactions and enter hedge transactions into organisational systems

evaluate and adjust financial positions

interpret and comply with organisational trading rules and limits.

Context of and specific resources for assessment

Assessment must ensure:

competency is demonstrated in the context of the financial services work environment and conditions specified in the range statement either in a relevant workplace or a closely simulated work environment

access to and the use of a range of common office equipment, technology, software and consumables

access to financial services product information

access to dealing systems and data.

Method of assessment

A range of assessment methods should be used to assess practical skills and knowledge. The following examples, in combination, are appropriate for this unit:

evaluating an integrated activity which combines the elements of competency for the unit or a cluster of related units of competency

verbal or written questioning on underpinning knowledge and skills

setting and reviewing workplace projects and business simulations or scenarios

accessing and validating third party reports.

Guidance information for assessment

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.

Financial products may include:

capital markets

cash

commodities:

hard

soft

derivatives:

forward rate agreements

swaps

options

futures

electricity contracts

foreign exchange

government bonds

managed funds

negotiable and transferable instruments

reciprocal purchase agreements

securities:

debt

equity.

Hedge instrument and choices may include:

forward contracts

futures

options

swaps.

Counterparties may include:

banks

exchanges:

Australian Securities Exchange (ASX)

Sydney Futures Exchange (SFE)

over the counter (OTC) price markets.

Transaction details may include:

considerations

counterparty

face value

maturity date

price

start date

trade date.

Organisational documentation may include:

dealing slips.

Analysing current hedge current position may include:

consideration of alternative products

how much money is in:

debt

profit

where the market is going:

economic

technical analysis.

Organisational guidelines and credit limits may include:

business rules of the exchange

credit limit

deal limit

industry association codes of conduct

loss limit

organisational codes of conduct

relevant regulations and legislation.

Unit sector

Financial markets

This unit contains employability skills.