The competitive investment banking market: Addressing the skill gap.

The investment banking domain has been growing extensively but there is a lack of skilled professionals in the industry. The most prominent banks such as the Bank of United States, UK Bank and South African banks have pointed out certain skill gaps that need to be addressed for maintaining a competitive investment banking market. An investment banker career is a very flourishing one if you have the right set of skills and qualifications.

As the hiring process continues in the sector of investment banking, many such recruits lack the effective skill set that is required for accelerated digitalisation and technological development. A proper investment banking course with placement will give you all the insights that are required to bridge the skill gap in this particular sector.

What is Investment Banking?

Investment banking is a form of banking that carries out large, formal and organisational banking transactions. The main focus of the discipline is to raise money for the government, large organisations and institutions. The functions of investment banking revolve around underwriting equity securities and new debts for multiple corporations. Facilitation of acquisitions merges and trading for private investors are also carried out by investment bankers. Multiple financial aspects are involved that are concerned with large projects.

Addressing the Skill Gap

The investment banking sector has focused on mainly the following areas of concern to upskill the investment banking professionals:

Cyber security

Cybercrime is one of the biggest threats to the banking sector. So companies are wanting to hire professionals who are more qualified and skilled in the domain of cyber security. It will help the companies to better protect the data networks and important information from security threats. Skilled banking professionals in the investment sector will mitigate threats and eliminate the risks regarding cyber crimes. Learning data protection, fintech programs, Artificial Intelligence and risk management can help you learn the best skills regarding cyber security.

Data analysis

Data Analytics is a very important skill that a banking professional should have. a deals with the understanding of all the tools, techniques and equipment required for collecting and analysing data in order to conclude. Data analysis proves that banks have the capability of providing quality solutions to persisting issues. Game up your Data Analytics skills for making accurate forecasts, creating growth opportunities, managing risks, remaining up to date with recent AI skills and improving customer experience.

Resilience

Resilience is very important when the work depends upon tight deadlines and the professional has to work under high pressure. You need to complete the task within the deadlines without losing your composure. In recent times that has been seen in the unique fruits that they lack resilience and get confused in high-pressure situations. It can be said that they have to gain more composer and insight for dealing with tight deadlines and crisis situations

Digital literacy

Keeping up with digital transformation has become a challenging factor in every industry. However, it is an integral part of the banking sector and there is no scope of lagging behind. The growing organisations and employees have to keep up with the digital world and its changing technologies. Digital literacy, thus, is a skill that you must possess if you want to make it big in the investment banking sector. Learning effective communication, sharing ideas virtually, thinking of innovative steps and digital team management are all part of the digital literacy skill.

Quick response and work readiness

In this fast-moving technological world, quick responses and actions are very important skills that cannot be overlooked. Whenever a problem arises or a crisis situation appears, you have to be quick in taking action to solve the crisis. This particular skill establishes work readiness and the banking sector is more focused on gaining fundamental powers. You can bridge the skill gap by becoming an effective investment banking professional by learning key skills such as operations management, business development, coaching for performance and business management.

Courses to Bridge the Skill Gap

To start your investment banker career, you need to first check the qualifications and degrees that you should have to get a position in your professional field. Any bachelor’s degree in Banking, Finance, Accounting or a relevant field is encouraged.

Apart from a bachelor’s degree, other investment banking courses after graduation that you can enrol yourself for to have a better career opportunity are as follows:

• Certificate courses in investment banking.
• Online courses in Banking and Finance.
• Diploma in investment banking.
• Masters in Banking and Finance.
• Masters in Accounting.
• Postgraduate courses in investment banking.

Conclusion

Investment banking is a prosperous field that can make you a big-shot professional in the digital era. If you want to make it big in the banking sector, becoming an investment banker can be your way of achieving success. Register yourself for the Certified Investment Banking Operations Professional by Imarticus and learn all the essential skills to become a competitive investment banking professional. 

Why investment banking courses are so important in the digital age

Lately, the entire world has evolved in its approach toward the revolutionising digital era we live in. The Covid-19 pandemic has played a noteworthy role in this change. It has affected almost every industry including the financial sector. As a huge part of the financial sector, investment banking is not only embracing digital technologies but making its way to be one of the vital services of the digital era. Therefore, it lays multiple possibilities in the future, if one does a good investment banking certification course, or learns financial services in depth.  

To catch up with the developing world, every sector needs to accept the digital age and the wide future opportunities that it holds. One such service which has made its place in the digital future is Investment Banking. To understand it better, we must know about Investment Banking and its future.

What is Investment Banking? 

Investment Banking is one part of the banking sector that is concerned with large complex financial transactions like IPO (Initial Public Offer) underwriting. Investment bankers help organisations in creating wealth in a variety of ways. They are a core part of any organisation because of the service they provide. 

Understanding the complications of the finance world is not everyone’s cup of tea, and this is where the importance of an investment banker comes in. Investment bankers are the experts in this field and are employed to manage huge projects by monitoring the current investing climate. Businesses need their advice in taking critical decisions and laying out the plan for further development. They also assist companies in meeting their financial challenges.

Important Functions of an Investment Banker

An investment banker has several roles to play in an organisation to produce maximum revenue for them. They act as a bridge between investors and large enterprises to facilitate productive investments and raise money. Among the variety of roles they play, one of their important functions is as advisors. Here, they analyse various factors that can affect a company’s share or finances and thus advise them to take appropriate decisions. 

The management of important financial documents also comes under the investment banker, especially when there is a need to present them in front of regulatory bodies. 

The list of functions they perform in an organisation is not done yet. They also look after asset & wealth management, trade & sales, and do ample research before making any decision. 

Each action is of huge importance for the company and thus they play an essential part in any organisation.

Investment Banking Course in Digital Age

The rapid development towards the digital future is something we all are dealing with. Now is the time to discover the various opportunities that the digital age offers. Talking about the financial sector, one of the popular services that an organisation needs are investment banking to enhance its revenue structure. 

As we know, one must evolve with the changing world, hence an individual can take financial markets training or do an investment banking certification course to be more acceptable in the digital future. In recent times, it has become more important to learn financial services and make the best use of them. These freshly organised courses will help you learn about the modern tools and techniques of this field and their application in the digital age. It will assist you in acquiring skills of modern-age investment banking that the future demands.  

There are several reasons that make investment banking courses important in the digital era, like:

Rise of Artificial Intelligence

The introduction of artificial intelligence has transformed various things in the investment banking sector. It has revolutionised the way we used to look at the finance sector and made it more user-friendly. And modern investment banking courses teach you all these applications to make the best use of them. 

Blockchain Technology

Recent advancements have also introduced blockchain technology (a digital ledger) for efficient use in investment banking. It has now become a crucial part of investment banking as it makes everything more safer and more secure. 

Advanced Customer-Relationship Management 

We regard a customer as a god in every business, thus it is evident to learn the best techniques of customer management. Recent developments have introduced automated systems to manage relationships with customers. But there is a guideline to use these systems for the company’s benefit and one should acquire this skill set. 

To be an important asset to any organisation, it is vital to gain modern skills and be able to cater to future demands. One must be equipped with the necessary expertise that is in demand. 

Thus, it is essential to learn from a course that makes you a certified investment banking operations professional. This will not only benefit an individual in learning the skill set of an investment banker but also groom them with the applications of digital technologies. After this, you will be ready to attract organisations with your innovative knowledge and ability to perform in the digital age. 

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10 YEARS OF INVESTMENT BANKING: A HISTORICAL OVERVIEW

The only investment banking course that your career needs in 2022

Investment banking as a career choice can be lucrative yet challenging. On one hand, your job might prove to be exhausting at times , while on the other hand, your rewards would be handsome enough to make your hard work seem too easy. The rapidly growing industry is expected to have an 11.9% CAGR (Compound Annual Growth Rate) between the years 2021 and 2022, thus making it ideal for you to learn investment banking at the earliest possible opportunity. 

The job is quite hard to get into because for a single job vacancy in the market, there are millions of applicants. So how to make your resume pop for the recruiters in that ocean of applicants? The answer is an investment banking course, which is proof of your stellar academic credentials. But before you go for the course, you should know what exactly the field demands.

Who are investment bankers?

Investment bankers are those financial experts who are responsible for managing the financial and investment-related decisions of their company, a bank or any other financial institution. In this field, your job profile would include administering securities, overseeing investments, generating capital, and so on. The primary role of any investment banker is to raise sufficient funds for their organization to help the organization grow and operate in an efficient manner. So, if you have a knack or intuition for numbers, then this field can be ideal for you, because, for this sector, showcasing only your degree is not enough.

How to start an investment banking career?

In India, it might take you approximately 7 years to complete your academics and relevant accreditations to becoming an investment banker. Here’s what you have to do:

Step 1: Complete your academics

Your investment banking career will start with baby steps, like first completing 10+2 from any stream of your choice. However, opting for the commerce stream might prove beneficial because you will get early exposure to subjects like business, accountancy and so on. Completing 10+2 is followed by completing graduation and post-graduation from reputed institutions, where you have to opt for subjects like investment, business administration, taxation, corporate finance, and likewise.

Step 2: Opt for a certificate program

To upskill yourself and make sure you stand out in an ocean of applicants, opt for a certificate program like the one offered by Imarticus. The Certified Investment Banking Operations Professional Course offered by Imarticus is a 180-hour course that prepares the learner in the most relevant skill sets required for the field. Paired with the required career assistance, this course is your next step to becoming a successful investment banker.

Step 3: Look for an internship

The next step is to search for and acquire an internship that will give you exposure to the real-life experience of an investment banker. The tenure of these investments can be anywhere between two years to two months. These internships are important as they offer you a chance to enhance your soft skills like communication, negotiation, presentation and likewise. 

Step 4: Secure a job

The final step is to grab your dream job. If your internship performance is beyond expectations, then you might be offered a permanent position in the same organization. You can also look for your dream job from various other job portals, on-campus hiring, job fairs, etc.

Investment banking courses: What factors to consider?

The ideal way to jumpstart your investment banking career is to opt for an investment banking online course. But, there are tons of online courses available at your disposal. So how to choose the perfect one? Here are two things to keep an eye on:

Course relevance

As mentioned earlier, there are many course options for you to choose from. But not all the courses are relevant for the job profile you seek to achieve. The FRM or Risk Managers have a very different criterion than traders, so you must choose a course that caters specifically to your needs and demands.

Brand value

Recruiters do not have the luxury to spend hours on each CV. They’ll only spend mere seconds for each application, which is all you get to make your impression. Simply relying on the academic degree or certain work experience is not enough, and you need to add some brand value to your CV with the help of relevant certificates from reputed institutions or online platforms. These will successfully showcase your capability and interest to work in the said field.

Summing up

This article sums up everything that you need to do to kick start your dream career in investment banking. Apart from the obvious monetary benefits, this job profile will also offer you the much-required personal growth owing to the fast-paced working environment. This field also offers fast professional advancement and a chance to learn new skill sets every day.

A Comprehensive Guide for Breaking into Investment Banking

Investment banking is a vast field that includes fundraising from the capital markets, investments, asset management, development of financial plans for mergers and administering securities. Therefore, apart from relevant degrees, one must possess the numerical aptitude and real-world experience for a successful career in investment banking. 

An investment banker’s primary job is to assist in fundraising for their client’s business activities. It also includes processing huge and complex transactions for their companies. They also act as corporate financial advisors and help companies to expand their businesses. 

Things to Know Before Getting Into Investment Banking 

Before you decide to pursue a career in investment banking, here are six things you must keep in your mind: 

• Ensure you are in the right job 

One thing that sets apart an investment banker from other professionals in the finance industry is that they may come from different educational backgrounds. Often, they implement their transferable skill set into other related professions like research and trading, something that suits their skill set. 

However, if you are interested in pursuing investment banking as your career, you must be prepared to dive into a demanding and stressful job. Understanding what is expected from your job profile will help you remain focused on making optimum use of any opportunity coming your way.

• Choose your career in investment banking wisely 

There are a plethora of job roles in the field of investment banking, each requiring different skills and personal attributes. 

If you are a corporate investment banker offering financial advice and services to other businesses, you are most likely to work on acquisitions, mergers, bonds, lending and shares. This job profile requires the ability to work under extreme pressure and solid negotiation and interpersonal skills.

On the contrary, if you work on an operational profile, you are responsible for handling different aspects of the trade life cycle. Here, you must possess strong numerical and analytical skills for a successful career in this profile.

• Study for a relevant degree 

Even though companies invest ample resources in training their staff on different aspects of investment banking, an undergraduate degree is expected from the potential candidates. It does not have to be strictly finance-related. However, subjects with a strong maths focus like- business management or economics are preferred. 

Many institutions help students learn the trade life cycle and other basic investment banking concepts. If you want to enter the world of investment banking, enrol in a course designed to make you understand every nook and cranny of investment banking from leading institutes like Imarticus Learning. Imarticus Learning has a dedicated investment banking course that will prepare you for the challenges of this industry and help you navigate through them.

• Participate in investment banking internships 

Several top financial institutions offer summer internship programs for students in investment banking. 

On-job experience, practical skills and specialised programs like foreign exchange training help you lay the perfect foundation for your investment banking career. With these internships, you may get a chance to work on actual deals and thus learn crucial technical skills. If you deliver a satisfactory performance, you may also receive full-time job opportunities after completing your internship. 

However, it is essential that you make an informed decision by first understanding different job profiles in investment banking and picking up the right one for you. 

While you submit your application for the internship program, understand what the recruiters want to evaluate during the screening process. Make sure that your CV reflects your technical abilities and interpersonal skills. It should be tailored to fit the internship profile.

• Build connections and create a network 

For a flourishing investment banking career, you must master the art of building connections and networking. Establishing relationships with corporates and professional investment bankers can help you stay updated about the latest job profiles in investment banking. 

One great way of building connections is to stay in touch with your peers and seasoned professionals. Not only can they provide you with insightful career guidance, but they also can facilitate your career progression in the coming years.

• Approach the right people

You must approach the correct person to ensure that your CV stands out among other candidates. Confidence is the key to writing your job application. Make sure to highlight your skills and strengths to attract the right eye.

A career in investment banking is a lucrative option in the finance field. However, it is a hard nut to crack. You must possess a robust numerical aptitude and analytical and interpersonal skills. Also, you have to be diligent about building your network and developing your communication skills. Nevertheless, with dedication, the proper education and guidance, you can successfully establish yourself in investment banking. 

The Complete Guide to Investment Banking with Interview and Placement Tips

In recent years, a career in investment banking has emerged as a leading option not in India but across the world. The reason being, it is a highly paid job that carries a lot of prestige. Also, the competitiveness of the market and the relief of seeing a deal through successfully is unmatchable to any other option.

However, getting into this investment banking segment is not easy. Since the field is highly desirable, you need to be prepared and ready to make a difference to get a shot.

But all the preparation for the interview and placement needs to be clearly explained to those who are interested in this field. So, read on to get an idea of how you can get a job here and some tips on interviews and placement as well.

How to get a job in investment banking?

It is neither easy nor difficult to have a career in investment banking. Given below are some of the basic steps that will help you –

• Invest in a bachelor’s degree

Investment bankers need to at least have a bachelor’s degree. If you are an investment banking aspirant, then you should consider pursuing accounting, finance, business administration or another degree that is relevant to this field. In addition, it’s important to have some sort of learning in economics, finance and mathematics.

• Go for an internship after study

Organisations in this field try to promote entry-level talent to gain work experience in investment banking because the practical experience you gain during an internship adds competitive skills to your resume, and you will certainly be preferred as a job candidate.

• Hunt for entry-level opportunities in investment banking firms

The easiest way to enter this field is to locate a position in investment banking for an entry-level job and apply. You could search for a job in the derivatives markets, stock market or any other capital market or pick an investment banking firm after completing your bachelor’s or master’s degree. 

• Apply for a master’s degree

It is not compulsory to have a master’s degree to have a career in investment banking. But if you want to advance in investment banking, then having a master’s degree makes all the sense in the world. It will certainly help you rise in the hierarchy.

Interview and placement tips for a career in investment banking

Here are some tips on interviews and placement to realise your dream of becoming an investment banker.

• Networking and resume

The first step in securing any job is to get an interview call. For that, you need to have the right connections and a killer resume. So, first, create a resume which covers all your experience. Along with that, you try connecting with people who work in a similar field and try to secure a referral that will help your case further.

• Knowing how and when to answer the questions in an interview 

If you are wondering what questions will be asked in the interviews, then here is a cheat sheet. You will be given problem-solving questions, technical questions and behavioural questions. These questions help to hire candidates for analyst or associate roles at a large global investment bank.

• Mastering technical skills

Master technical skills like accounting, financial modelling, valuation accounting and various software to become an investment banker. For this, you can refer to any investment banking course with placement. These professional courses are specially designed to give you the edge you are looking for.

A great example of such a course is the ‘Certified Investment Banking Operations Professional’ course from Imarticus Learning. Our courses will help you to be prepared to secure a job in investment banking. 

To sum up, following the steps provided in this guide will help you build a career in investment banking by helping you gain the expertise and skills required starting from the fundamentals.

Investment banker course insights: 5 skills that make you a rockstar investment banking analyst

What is Investment Banking?

Investment banking is stated as one of the Top 2 careers in India. It is a specialized branch of banking that helps organizations and individuals in raising financial capital and provides them with financial consultancy services. Investment banking primarily provides services in the sectors of banking that are outside the normal ambit of banking operations. It deals with:-

• Financial Modeling  and Valuation
• Advising on Mergers and Acquisitions
• Leveraged finance
• Restructuring
• New Issues or IPOs

What does an investment banker have to do?

As an investment banker, you are required to have mastery over the tools such as financial models, pitch books, industry research, and report writing, which are extensively used in this field. The use of these tools demands knowledge of the quantitative part (financial statement analysis, ratio analysis, DCF models, M&A models, etc.) and the qualitative part (industry research, pitch books, report writing, case studies, company profiles, etc.).

In the financial milieu of today, investment banking offers immense career possibilities. Equipping yourself through a good course, which provides you with a balanced combination of the theoretical and the practical parts, is likely to propel your career growth as an investment banker. There are several investment banking courses online that will give you the knowledge, application ability, and try-outs in a well-structured and holistic manner.

 Top 5 Investment Banking Courses Online

The impact of the online courses needs to be mapped judiciously through the parameters of –

• Time (duration of the program)
• Course content and pedagogy
• Quality of trainers and mentors
• Facilities for internship and placements
• Return on your investment

Considering all parameters, here are 5 of the top investment banking courses online available in India in 2022. These are randomly put and do not reflect any order of merit in respect of the courses mentioned.

1.   Certified Investment Banking Operations Professional (CIBOP)

The CIBOP has completed 1000 batches. Its curriculum covers complex securities and derivative products and includes their trading lifecycles and functions.

The holistic CIBOP curriculum is designed by industry experts.  Euronext Group, a partner to the program, allows exclusive access to their own content to CIBOP students. This investment banking course online includes hands-on learning, actual case studies, and trading simulations.

The program is flexible to suit your own time availability and schedule. CIBOP is delivered both in classrooms and in online mode. You may complete the 180-hour course through a 2-month program done full-time (on weekdays) or as a 3-month part-time one done over the weekends.

The program includes live and relevant case studies. Trading simulations allow for an opportunity to exercise your own decisions and gain insights into the derivatives and securities markets.

If you meet the criteria for scores and attendance in each of the three parts of the course, you are eligible for placement services.

You are eligible for enrolment if you are a commerce graduate or a finance graduate with 0 – 3 years of experience.

2.   Executive Program in Investment Banking and Capital Markets

This investment banking online course is designed for working people with classes usually scheduled on Saturdays, from 6 pm to 9 pm.

This comprehensive program spans three foundation modules and seven advanced modules. These impart knowledge in the fundamentals of mergers and acquisitions, debt and equity capital markets, portfolio management, sales and trading, and securities regulations. 

You learn through real-world projects and case studies, live examples from the recent capital market and corporate finance events, and general discussions. You get to do a capstone project to apply your learning to practice.

You are evaluated through assignments, online and written examinations, and other methods.  There is a mandatory six-day immersive on-campus part to this program facilitating interaction with your peers and faculty.

Your certificate is issued by the Indian Institute of Management (IIM), Calcutta one of the rare triple crown accredited management schools in India) as partners to this program.

3. 
   

   Advanced Management Program in Financial Services and Capital Markets

This 6 months, 126 hours online investment banking course embellishes your basic financial knowledge and skills with the fundamentals of corporate finance, risk management, and compliance, Fintech, capital markets, valuation, and equity research.

You gain expertise in subtleties of investment banking, capital markets, risk, and Fintech domains through an outcome-focused curriculum delivered through hands-on learning. This course includes the new age elements across Digital Banking, Technology, and Fintech.

Apart from certification by IIM Lucknow, learnings from case studies like the Financial Policy at Apple, Valuation of Calaveras Vineyards, Risk Management at Well Fleet Bank, etc. will comprise key takeaways that will help enrich you.

4. 
   

   PG Program in Investment Banking and Capital Market

Captioned as one of the most exhaustive certification programs in investment banking it spreads over 180 hours of live training and 36 hours of project-based learning spread out over 6 months. Classes are held over weekends to aid working professionals.

Taught by industry professionals across investment banking, the course comprises 17 modules across the entire gamut of investment banking, financial services, and capital markets. Placement assistance and interview training are included as part of the curriculum.

Live case studies are included in this investment banking course online. Some of the examples include the Vodafone-Idea merger, Flipkart’s acquisition of Myntra, and Harvard taught case studies.

The program is collaborated by the London Governance and Compliance Academy (LGCA) and three different certificates are issued upon its successful completion, all widely recognized by the industry.

5. 
   

   Certificate in Investment Banking (CIIB)

The prime focus of this investment banking course online is on Investment Banking Basics, Financial Statement Analysis, and several other crucial financial concepts. This investment banking course online is aimed at professionals in finance seeking advancement in their careers.

The program uses interactive learning tools and builds an expert foundation in investment banking, securities and markets, and other areas of financial consultancy.

CIIB requires qualification through a comprehensive global certification exam, which is designed to examine your skills and level of understanding of investment banking. Your IB certificate thus bears testimony to your capability to develop a disciplined and systematic approach toward Mergers and Acquisitions, LBOs, IPOs, restructurings, and other investment decisions.

 In Conclusion

These are five of the best online courses on investment banking and capital markets. These courses help you kickstart your investment banking career and gain a foothold in a fast-growing career path. Hone your skills and learn from the best with the help of these courses.  

From BSE to NSE: Understanding the concept of Derivates Market in 2022

Introduction

Do you have a genuine knack for the financial market? Is your interest in the concepts of derivatives growing day by day? If your answer is yes to both these questions then a career in investment banking might be just the right fit for you. Before you jump into your search for the best investment banking courses on the internet, let us briefly revisit the basic concepts of the derivatives market, its benefits, and uses, and how you as an aspiring investment banker can play an active role in this money market.

Derivatives Market Explained

A derivative is a type of financial contract between two individuals/parties or more. The underlying basis of this contract is a mutually agreed-upon financial or commodity asset (for example security) or a group of assets (referred to as an index). The most commonly used financial instruments used to forge a derivative contract are commodities, currencies, bonds, market indexes, interest rates, and stocks.

In a derivatives market, you are likely to come across these three kinds of participants:

1.     Hedgers

Hedgers are traders who engage in self-protectionism from the risk that arises out of price movements. They will cover or hedge their position by getting into a trade policy of the opposite nature and attempt to pass on the risk to those who are comfortable bearing it. In this way, they protect themselves from the risk or uncertainty associated with a particular price.

2.     Speculators

Speculators have an appetite for high risk and can predict the future price movement to make gains quickly and largely. Speculators try to garner the maximum output out of price volatility. They absorb excess risk and provide liquidity in the market where other investors would not like to get involved.

3.     Arbitrageurs

Arbitrage involves low-risk trading and the arbitrageurs buy securities in one market and parallel sell in the other. This happens when the same kind of securities are being sold in two different types of markets simultaneously at different prices.

Types of Derivatives

To understand the derivatives market better, you also need to have an idea of the four sub-types:

1.     Forward Contracts

Customized agreement between two parties wherein they mutually agree to trade on a particular asset or commodity at an agreed-upon price and a fixed date in the future. They are under a contract basis to bear the respective loss or profit should things go/not go in their favor. These contracts are traded privately over the counter.

2.     Future Contracts

The standardized alternative of the forward contract type. Two parties agree to trade on a particular contract at a specified date and time and a fixed price. Unlike forwarding contracts, they can be traded on the exchange.

 

3.     Options Contact

A mutual agreement between the seller and the buyer wherein the buyer is given the right to either buy or sell a particular commodity or asset at a later date in the future at a fixed price. However, the buyer is not obliged to do so.  

4.     Swap

Under this type of derivative contract, two individuals or parties exchange the liabilities or cash flows from two financial instruments separate from each other. The swaps are based on a notional principal amount such as a bond or loan.

Benefits of Derivatives

If you are wondering why the derivatives market is so lucrative to traders and investors, here are some of the benefits of its uses:

 

• Hedging Risk Exposure

 

A derivatives financial contract helps to hedge or bypass a possible risk underlying an asset

 

• Underlying Asset Price Determination

 

Helps to determine or predict the price of an underlying asset

 

• Access to Unavailable Assets

 

Derivatives can aid you to get quick access to assets that are otherwise not available

•  Market Efficiency

Derivatives contracts help to duplicate the asset payoff. Thus, they increase the efficiency of the financial market.

Role of Investment Banker in Derivatives Market

When it comes to the derivatives market, investment banks have a huge role to play as their interests are involved in this market from across the world. Needless to say, this is where the part of an investment banker gains prominence:

1. 
   

   Advice to Clients

When it comes to global investment banking, investment bankers offer advice to their clients to sometimes restructure finance to navigate away from possible bankruptcy, they can advise about mergers and acquisitions. To do these things, investment banks obtain access to books that help them analyze the risks involved and where they should hedge.

2. 
   

   Market Making

Investment bankers sometimes liquidate their positions before maturity and act as market makers. The market-making ends up utilizing a lot of capital from the trading desk of the bank involved and offers an exit route to the investors.

3. 
   

   Structured Products Creation

When the needs of the client cannot be solved with futures and swaps, the global investment banking firm will call in ‘quants. These are highly specialized professionals to analyze risks and club the products together to generate a new financial product which is known as a structured product.

4. 
   

   Marketing Structured Products

Once the quants have created the new structured products, the investment bankers will now need to find parties who are willing to buy them. This is a very difficult task that requires a lot of skill as the newly created products are perceived to be very risky in the financial market.

5. 
   

   Act as Middlemen

When investment bankers are unable to find counterparties to sell their newly created products to, they hire risk analysts to evaluate the risk involved if they are to trade it on their books.

Skills Required by an Investment Banker

If you feel intrigued about the derivatives market after going through this article and wish to enroll in a course, you should know what basic investment banking skills to become successful after training:

•         Strong intellect
•         Self-discipline and diligence
•         Open-mindedness
•          An academic inclination for subjects like linguistics, sociology, and anthropology
•         Communication skills

Conclusion

If you want to buy and sell derivatives or just want to help organizations or parties to buy or sell their product you should enroll certified investment banking operations professional course from any reputed institution which will train you intensively to become an expert investment banker in the future.