IC314-Bond and Money Markets

Module Provider: ICMA Centre
Number of credits: 20 [10 ECTS credits]
Level:6
Terms in which taught: Spring term module
Pre-requisites: IC211 FX and International Debt Markets and IC102 Introductory Finance/Trading Simulation I
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Current from: 2022/3

Module Convenor: Dr Ivan Sangiorgi
Email: ivan.sangiorgi@icmacentre.ac.uk

Type of module:

Summary module description:

Bond and Money Markets explores the economic drivers and relationships between bond, money markets and central bank monetary policies, and the impact of key economic drivers on the pricing and trading strategies for bond and money markets. The module offers students the opportunity to gain an understanding of how these connections affect interest rates, trading positions, funding liquidity management, and the challenges faced by practitioners as well as regulators/policy makers. The course also covers the overall functions, pricing, structure and operation of bond and money markets. Additionally, the module will help students develop mentoring and coaching skills, personal effectiveness, action planning and career decision-making skills.Ìý

Aims:

The main aims of the module are to provide the tools for understanding the functioning and pricing of money markets, their connection with bond markets and central bank interventions, the fundamental determinants of interest rate markets and the commonly used trading strategies.ÌýÌý

The lectures will provide: 1) the fundamentals of money markets, repos and bonds, and their pricing, 2) identification of trading strategies, 3) practical examples of current market situations, 4) an opportunity to mentor Part 1 students, 5) opportunity to learn the GROW coaching model and 6) opportunity to coach each other to develop career development action plans.

Assessable learning outcomes:

By the end of the module, it is expected that students will be able to:

• Define the main aspects of the economic theories of the determination of money market rates and their interlinkages with bond markets and central bank monetary policy operations.Ìý


• Explain the role of collateral and repo markets, their pricing and trading techniques.


• Evaluate economic situations to determine the likely implications for money market instruments.


• Explain common trading strategies of bond and money market instruments and the key features of funding liquidity management.Ìý


• Write a developmental career plan.

Additional outcomes:

The module aims to supplement quantitative skills with the knowledge of the economics of bond and money markets necessary to design trading strategies and to manage funding liquidity.Ìý

The module also encourages the student to use Bloomberg for practical real-world examples.Ìý

Furthermore, the students will learn about career development, and how to make a plan regarding next steps in their careers.Ìý

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Outline content:

Lectures include:Ìý

• The economics of bond, money markets and interest rates.Ìý


• Money markets: arithmetic, pricing and trading of alternative funding sources.Ìý


• Bond pricing and yield curve trading strategies.Ìý


• Central bank monetary policy operations and quantitative easing.Ìý


• Pricing and trading of repos.


• Scarcity of bonds, bond market liquidity and funding liquidity.Ìý


• Money market derivatives: trading strategies in bonds and money markets.Ìý


• The impact of regulation on funding liquidity management.Ìý


• Pricing and trading of corporate bonds, with a focus on green, social and sustainability bonds and loans.Ìý

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Additional topics in terms of career development:Ìý

• Introduction to -practical goal setting, coaching, and understand aspects of the careers models and their use in career action planningÌý


• Group applied careers practice 1Ìý


• Group applied careers practice 2Ìý

Brief description of teaching and learning methods:

Lectures will be used to explain core theory and concepts discussed in the course.Ìý The module’s delivery follows a practice centred approach and extensively utilises Bloomberg to provide a more in-depth understanding of certain topics. Seminars will be based around set questions and preparation for examinations. Interactive workshops where students will participate in experiential learning, followed by some input from the facilitator and b e signposted to further resources should they wish to continue to develop their knowledge in these areas.Ìý

Summative assessment- Examinations:

Final exam: 70%, three hours, two out of three questions.Ìý

The examination for this module will require a narrowly defined time window and is likely to be held in a dedicated exam venue.

Summative assessment- Coursework and in-class tests:

Multiple Choice Test: 20%, one hour, twenty questions, scheduled in last week of the Spring Term.

Practical skills assessment: 10%, submission of career action plan (maximum 1,000 words) with submission deadline scheduled in week 9 of the Spring Term.

Formative assessment methods:

Self and peer evaluation of career development and career action planning.

Penalties for late submission:

The Module Convener will apply the following penalties for work submitted late:ÌýÌý

• where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day[1] (or part thereof) following the deadline up to a total of five working days;ÌýÌý


• where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.Ìý

The University policy statement on penalties for late submission can be found at:



You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.ÌýÌý

Assessment requirements for a pass:

40% overall grade.

Reassessment arrangements:

Re-sit written examination only to be taken in August/September, as part of the overall examination arrangements for the BSc programme.

Additional Costs (specified where applicable):

Last updated: 22 September 2022