Futures and forwards - Deep dive

Whoever has watched "The Wolf of Wall Street" has likely struggled to understand the jobs, products, jargon that surround financial markets. Some of us are still trying to get our way out of this financial jungle and clarify the associated strategies. Let's demystify these!

In close collaboration with PwC's subject matter experts, PwC Academy has developed a comprehensive, multi-layered training curriculum for junior and more experienced financial industries’ employees and managers alike, who seek to gain a solid knowledge of derivative instruments.

With this second module on futures & forwards, participants will refresh the basic feature of the product and the attached valuation principles. Participants will add a second layer on their comprehension through the exploration of the lifecycle, the accouting treatment and finaly the impact on the financial statements.

By the end of this training, participants will be able to:

• describe the key features of futures and forwards;
• develop a comprehensive understanding of their operational mechanisms;
• identify optimal use cases for these instruments, either independently or in combination with others;
• explain valuation methods and factors influencing the value of futures and forwards;
• recognise major risks and propose controls to mitigate them.

• 1. Introduction
  • Refresher of derivatives foundation modules
    • Overview of derivative instruments (e.g., forwards, futures, options, swaps)
    • Types of derivatives (e.g., equity, commodity, interest rate, foreign exchange)
    • Purpose: risk management (hedging) and speculative trading
  • Reminder of valuation principles applicable to the accounting treatment:
    • Methods for determining fair value: market value, mark-to-market, Black-Scholes model
    • Accounting for fair value changes over time
• 2. Lifecycle of instruments
  • Contract creation: standardised contracts and the role of clearing houses vs. customised contracts and the Over-the-Counter principles
  • Trade execution and agreement
  • Post trade processes: margin market, adjustments (futures) and maintenance (forwards)
  • Settlement
• 3. Accounting treatments under IFRS
  • Initial recognition
  • Subsequent measurement
  • Closing treatement
  • Impact on financial statements
  • Balance sheet
  • Income statements
  • Cashflows

This training is coordinated by Laurent Dubois, Director at PwC Luxembourg.

The different modules will be presented by experts in derivatives.

Laurent is active in our Assurance practice in managing and delivering a diverse range of assurance engagements toward Alternative and Banking actors to local and international clients and PwC offices.

He has exposure to a wide range of valuation methodologies, a practical understanding of the effective strategies delpoyed by its clients in the context of financial reporting.

Laurent is Réviseur d’Entreprises Agréé (REA).