DAS Commodity Trading BLOCK
PeriodSeptember 2020 - July 2021
Registration deadline30 June 2020
Registration fees: CHF 350.- (not refundable)
Tuition fees: CHF 16000.-
- Gain a solid understanding of commodities markets and trading transactions
- Explore trading technology trends and innovation
- Master all aspects of risk management in trading
- Analyze the financing of trading activities
- Look into sustainability challenges & legal aspects
- Basics of Commodity Trading and World Trade Flows
- Trading Transactions
- Shipping, Logistics & Transport
- Risk Management, Tools & Derivatives
- Information Systems & Innovation (online)
- Trade Finance Banking Instruments
- Insurance Risk & Market Intelligence
- Commodity Trading Simulation (online)
- Commodity Financing & Treasury
- Credit & Asset Management
- Organisation, Sustainability & Responsibility (online)
- Compliance and Legal Aspects (online)
Prof. Jean-Paul VULLIÉTY, Geneva School of Economics and Management (GSEM), University of Geneva
The module aims to give a general overview of commodity markets and commodity trading in order to provide a context for the more specialized later modules. It should allow students to understand the wider economic environment in which commodity trading takes place and how commodity trade interacts with the rest of the world economy as well as the basics of commodity trading.
Manage the entire process to generate a deal with a sound understanding of all costs involved and risks to be covered.
Course Objectives and Takeaways
The course provides the key elements to have a deeper understanding of oil market and related transactions. More specifically, the focus will be set on the following topics:
- Know the origin of oil and its derivatives
- Understand oil market and characteristics
- Assimilate buyer and seller obligations against INCOTERMS 2010
- Locate products against requirement
- Negotiate contract terms
- Elaborate deal budgets
With over 90% of World’s trade carried by Sea, participants are likely to encounter maritime transportation in the course of their careers whether they will be directly engaged in the process of moving the goods (trading, chartering, operations and etc.) or not (trade-/finance, insurance, legal and etc.).This module will provide a synthetic presentation of key areas related to seaborne transportation. We will look at various technical, commercial, economic and legal concepts and tools that stakeholders need to master to understand, analyze and anticipate for efficient navigation through complex environment where shipping is one of the cornerstones.We will also briefly speak about the pipeline transportation -existing systems, economics and common problems.
Logistics & Transport
- Understanding of the trading workflow. The student will be able to identify the different steps of a trade from the sign-off of the contract to the delivery of the goods. The student should be able to integrate in this analysis the specificities of the different commodities
- Understanding of contracts set-up (incoterms, etc.).The student should be able to link the different documentations to the contract. At the end of the module, he will be able to list the documents used on specific trades as shipping documents. She / He will be able to identify the right Incoterms according to the trading strategy and the impact of an incoterm choice on trading operations / documentation
- Abilities to identify impacts of contracts set-upon trade operations example.The studentbased on trade details, will be able to describe trade operations and identify the pitfalls of a contract. She/He will be able to identify the coordination requirements / specifities of the trade operations
The objective of this 4th module is to familiarise students with trading risk issues and their management/monitoring. The module will consist of identifying, quantifying and managing risks, directly or indirectly related to price risks. At the end of this section, the participants will have developed their capacity to understand the traders’ approach towards risks and opportunities in the commodity trading industry (with a focus on pricing risks) and understand the elements of risk management techniques in commodity trading.
Course Objectives and Takeaways
- Define and identify risks
- Master hedging techniques
- Understand notions such as Position capture and Mark-to-Market within a commodity trading structure
- Be familiar with option contracts and strategies
- Use and understand the different VaR models: parametric, historical and Monte-Carlo simulations
The commodity trading industry is facing a significant transformation driven by a surge of volatility in commodity prices, intensification of regulations and compliance requirements, proliferation of complex products and transactional models, reduction of margins and a willingness to act in larger parts of the supply chain. These external challenges have re-shaped the strategy and the vision of many of the corporations operating today in the commodities industry.
In this context, the role of information technologies has become of extreme relevance in underpinning both the design of these strategies and their implementation; either contributing to the reduction of costs and operational risks through common data and information architectures, straight through processing and real time reporting or by supporting new revenue generation business models through continuous innovation.
This course explores information technologies from the perspective of a commodities trading corporation. It will provide a number of exemplars of the application of information technologies and the latest innovations in the commodities industry. Moreover, it will analyze the importance of IT and business alignment to achieve above mentioned objectives and how to enable, in practical terms, a strategy focused information technology organization.
Information will be presented in the form of use cases, academic research, articles and whitepapers published by respected scholars and experts in the field, and the actual disclosures of major multi-national companies in the industry, including service providers, consultancy companies, software houses...
Understanding the mechanism of the main banking instruments used for obtaining financing from financial institutions in order to secure payment and performance in trading of commodities on the international market.
- Understanding UCP600 and their usage
- Ability to choose the best payment instrument for a trader
While students may probably never work in the credit and political risk insurance (CPRI) market, understanding how the market and product works will be of valuable importance for anyone involved in commodity trading or financing.
Indeed, trade credit and political insurance is a critical business enabler that is massively used by financial institutions and trading houses to mitigate risks and to grow business. The use of this insurance product has become a common risk management tool in the finance industry.
The course will give an overview of the market and its players as well as providing an understanding as to how banks are using insurance as a Credit Risk Mitigant under Basel requirements. We will explore the various products available to traders in (i) the single risk, (ii) portfolio (Whole Turnover and Excess of Loss), (iii) surety and (iv) Political Risk markets.
Finally, we will go through the claims process and market statistics which will demonstrate that the CRPI product does work.
At the end of the course and the various case studies, the students will have a broad understanding of:
- how the market works
- how banks use insurance as Credit Risk Mitigant under Basel requirements
- the various CPRI products available for banks
- the various CPRI products available for traders
- the claims processes
Market Intelligence is a set of methods and techniques that handles large amount of data which are used by organizations for the decision-making process. Market intelligence uses multiple sources of information to create a broad picture of the company's existing market, customers, competition, discovery of trading opportunities and growth potential for new investments in goods and services. The development of marketing intelligence strategies to build and sustain a competitive advantage in the marketplace is a key ingredient and differentiator in the success of companies in the commodity space. This course will introduce you to key concepts, analytical tools and skills that you can use to understand, analyze and evaluate the challenges and opportunities that trading companies face when trying to organize and interpret data.
The practice of commodities trading is the process wherein all Commodity products are exchanged to satisfy current demand. Traders engage in it to remove any inefficiency in the market. In the market for commodities, there is always a way to make a profit with managed risk, and this is via arbitrage where traders play with immediate price differentials.
During this module, students will have the opportunity
· To identify new trading opportunities using Business analysis canva
· To test in a simulation environment their concrete understanding of the trading industry: from the management of cash contract, monitoring of portfolio/positions to hedging cash contracts on exchanges.
· To familiarize themselves with real tools of the industry: Data Management Screen, Order Management System, Document templates from the industry.
Information will be presented in the form of use cases, academic research, articles, and whitepapers published by respected scholars and experts in the field, and the actual disclosures of major multi-national companies in the industry, including service providers, consultancy companies…
Rules of the simulation will be communicated in detail at the beginning of the module through the commodities trading simulation Handbook.
Students will have to connect to many platforms and will receive details for this purpose.
Module 7 presents the various financing methods that are available to the commodity trading companies.
The module first deals with the types of financing which are typically used by or available to commodity trading / distribution companies, such as:
- Transactional Trade Finance;
- Inventory Financing – repurchase agreements;
- Borrowing Base;
- Prefinance and Pre-export finance, which are two different types of financing yet having some common features;
- Payment Risk Assumption (“PRA”) & Credit Risk Insurance (“CRI”), two credit risk mitigating tools that share common aspects but also significantly differ.
The module also covers some other types of financing which can be used by commodity trading companies when they reach a certain stage of development and/or are used by other commodity markets participants (E&P players, mine owners,..), namely:
- Reserve Base Lending (“RBL”);
- Revolving Credit Facility (“RCF”).
Other types of financing which will be covered in Module 10 include Asset Finance, Acquisition Finance, Bridge Loan and Project Finance.
Course Objectives and Takeaways
Objectives of module 7 are the following:
- give participants an understanding of the various tools / products and methodologies that lenders have developed over the years in order to finance the commodity trading companies, and
- illustrate how commodity trading companies manage their treasury requirements thanks to such financing tools.
Each type of financing is dealt in a similar manner, i.e. covering the following aspects:
- Principle & reimbursement sources
- Parties involved
- Type of duration
- Typical risks
- Challenges for the Lender and the Borrower
- Advantages for the Lender and the Borrower
- Nature of the financing
- Typical structure of the credit facility
- Legal framework
- Management – follow up and position keeping.
At the end of the course, the participants will be able to:
- Understand the specificities of the various financing methods available in order to finance trading companies, some of the technical aspects of such methods, the sources of risks and how to mitigate them.
- Have hints and tips to help choose / decide which type of financing would be the most appropriate depending on the business and related needs of the trading company.
- Be familiar with the specific language of the industry in order to be in a position to exchange with other members of the industry.
- Understand how trading companies manage their treasury requirements thanks to the use of the various financing methods covered
• For the first part of the module (asset management)
- Be familiar with the various steps required for a proper due diligence
- Understand the various valuation methods
- Be familiar with the various financing tools available
• For the second part of the module (credit analysis)
- Be able to contribute to the preparation of a credit application or information memorandum, either as an employee of a lending institution or as a member of a trading company seeking to raise financing;
- Have an understanding of the specificities of trading companies’ financials (compared to other traditional corporate) and have tips to analyse such financials;
- Understand the criteria which influence a lender’s credit committee to provide a credit facility;
- Be in a better position to negotiate terms and conditions in relation with a credit facility agreement.
A very interactive course divided into phases:
1) Formal presentations where participants actively listen and take notes in order to acquire the
“theory”, however based on illustrations, examples and real situations,
2) Q&A sessions, discussions about peripheral, yet eminently related subjects, where participants are encouraged to actively engage in order to illustrate and supplement the previous presentation, and
3) Case studies, exercises and/or readings to ascertain that the content of each section is successfully assimilated.
4) Regular consolidation during which the participants are given the opportunity to relate what they have gathered in order to make sure most important concepts are acquired.
The objective of this course is to provide students with an overview of expectations towards corporations active in commodity trading in the area of responsible business conduct. It will examine international standards, with a special focus on business and human rights and what is expected from companies and how it should be implemented in commodity trading. Looking at the latest developments in business and human rights in commodity trading it will provide students with tools to address this increasing concern and to avoid potential adverse impacts of corporations.
- Understand expectations towards companies in the area of responsible business conduct
- Understand responsibilities of commodity trading companies in the area of business and human rights
- Analyse challenges in responsible business conduct in commodity trading
- Analyse potential negative human rights impact in commodity trading activity
- Develop proposals for enhancing responsible business conduct in commodity trading
The objective of module 11 is to give an overview of
i) the various laws and regulations, international and national, which apply to international commodity trading and its many stakeholders, such as the producers, traders, shipping companies, trade finance banks, etc., and
ii) the legal dispute resolution mechanisms available, including mediation, arbitration or proceedings before the courts.
The regulatory environment dramatically extended during the last years and heavily impacts the daily work of all the individuals active in trade related matters, requiring new knowledge, competences, and additional human and technological resources.
This course will first review the history and current status of the combat against money laundering, with a particular focus on Trade Based Money Laundering, which will lead us to explore the essential "Know Your Customer" process.
We will also address the recent Swiss and international developments in the fight against corruption.
Compliance with sanctions has likewise become an essential part of the current regulatory world, with the fragmentation of various conflicts around the world, especially in regions rich in raw materials, and the increasing use of sanctions as foreign policy measures. We will in particular address the extraterritorial effects of the sanctions over international trade, how practitioners handle these matters and the consequences of non-compliance to sanctions.
We will also explore Swiss and other national regulations impacting international commodity trading and we will finish on the various dispute resolutions mechanisms available in the world of trade and trade finance.
Course Objectives and Takeaways
· better understand when and how the fight against financial crime has started and evolved
· be more aware of the importance of various internal processes, such as KYC and compliance with sanctions, and be in a better position to follow them if in place (design them if not), all in their best interest and in the interest of the companies employing the students
· better identify suspicious transactions and be in a position to decline and/or report them
· better convince their clients or counterparties of the usefulness to respect the rules applying to the industry
· understand how disputes may be resolved or avoided
- A university degree or equivalent
- A minimum of 3 years of professional experience
- Proficiency in English is required
Number of participants
12 modules set up in 4 blocks of 2 modules over 6 consecutive days each + 4 online modules
- Olle Ostensson, Consultant specialized in assessment of government policies with respect to the commodities sector, France
- John Keane, Managing partner, Petroconsult Sàrl
- Alexander Volkov, Head of shipping operations and marine claims, Mercuria Energy Trading SA
- Carine Albertini-Jadot, Operations manager and business process & technology expert, Trafigura
- Stéphanie Trabia, Consultant in energy markets, Geneva
- Gustavo Wolf, Global head of market risk and middle office, Louis Dreyfus Company
- Paula Freire, Global head of applications and regional IT head EMEA, APAC and China, COFCO International
- Pierre Theze, Head documentary credit, Banque cantonale vaudoise
- Philippine de Villèle, Director of Berry Palmer & Lyle Ltd., BPL GLobal
- Stefan Meulemans, independent meteorological advisor, Brussels
- Pierre-Edouard Dolhen, Head of EMEA Derivatives Middle Office, Louis Dreyfus Company Suisse S.A.
- Guillaume de La Ville, Owner at Commodity Finance Guillaume de La Ville, Geneva
- Prof. Judith Schrempf-Stirling, Associate Professor of Responsible Management, GSEM, University of Geneva
- Philippe Berta, Head Coordination - Legal Trade Finance, BCV - Banque Cantonale Vaudoise, Geneva
"After working for a few years in the commodity trading area, I was looking to strengthen and expand my knowledge further in that field. This course fulfilled my expectations by providing a solid foundation in trading. There is a good balance between theory and practice. Experienced speakers also contribute to its success. We could leverage the nice atmosphere among the group of students to manage the workload, which is quite intensive. Participants come from different sectors of the industry enhancing the network. I would definitively recommend this course to anyone wishing to make a career in the trading industry." Amaury Burdet, Risk Management Group, Cargill International SA