Elements and Performance Criteria

RANGE STATEMENT
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.
A credit support document (CSD) is:
a document setting out the terms and conditions under which collateralisation will occur.
Market to market (MTM) is:
the current market value of a single trade or trade portfolio.

NB A minimum transfer amount for single trades is a minimum amount that can be called and transferred to avoid costs of small transfers.
Netting:
permits individual trade values to be aggregated to provide a single exposure that should be included in an agreement so it is enforceable.
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.
Financial products may include:
cash
bonds
derivatives:
forward rate agreements
swaps
options
futures
foreign exchange
securities:
debt
equity.
Transaction details may include:
consideration
counterparty
face value
maturity date
price
start date
trade date.
Non-cash collateral valuation percentages (sometimes called a 'haircut') apply to:
bonds or other forms of collateral subject to changing credit rating or liquidity.
Threshold amounts are:
predetermined amounts of unsecured credit exposure that an organisation and counterparty are prepared to accept, set at levels that maximise credit risk mitigation.
A break clause:
permits either party to the collateral agreement to break the swap on agreed future dates and the MTM value is exchanged.
Disputes may arise due to:
missing trades
unreconciled trade data
variations in data used for valuations
yields calculated at different times or from different sources.

EVIDENCE GUIDE
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:
manage collateral agreements and transactions and enter details in 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 markets product information.

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 business simulations or scenarios
accessing and validating third party reports.

Guidance information for assessment