Multimedia TradeWind Limited

a member of the Lywood David International Group

Multimedia TradeWind Limited's WINDEAL for Money market

WINDEAL for Money market software provides a realistic and challenging simulation of dealing in the domestic and international interbank cash deposit / loan / Treasury Bills/Bankers Acceptances and Certificates of Deposit markets together with the short term derivatives markets using exchange traded Financial Futures and Over the Counter Forward Rate Agreements.

The Money market module has great potential for initiating trainee dealers, giving them a realistic experience of what Money market dealing is about, and giving others - back-office, systems development or audit staff - an understanding of interbank dealing practices, asset and liability management and interest rate risk management techniques. The product can also be of significant help in assessing potential aptitude for dealing.

figure 6: <b>WINDEAL </i>for Money Market</i></b> main dealing screen

figure 6: WINDEAL for Money market main dealing screen

WINDEAL for Money market simulates all the principal ways of dealing in the money markets - including interbank, corporate contact and dealing via a broker. Contact is possible with a Futures broker in respect of STIR Futures trading. Parameters in the system also permit communication between the dealing desk and the in-house commercial lending department managing credit facilities (roll-over loans and new drawdowns) granted by the institution to its key corporate clients. All contact takes place via screen based conversations (figure 6) with the various types of counterparty in the system and lead to a deal - or not, depending on the userís skills in handling typical market situations.

In the foreign exchange market volatility is the marketís driving force. In the money markets this is not so much the case, with market interest rate changes more subtle. Whilst managing the on-going cash requirements / liquidity of the institution other important aspects of a money market dealerís job such as deciding upon the funding corporate loans, considering short term derivatives for hedging or trading application, squaring up the short date Nostro cash positions and responding to incoming corporate deposit rate requests generate the activity levels to keep the trainee totally fully involved.

WINDEAL for Money market keeps track of the traineeís dealing performance in terms of cashflow and mismatch (gap) positions (figure 7), liquidity, trading positions (portfolio totals of Bills, Repos *, T-Bills/BAs, CDs, Financial Futures and FRAs), positions against Counterparty limits, profit and loss on dealing, and how effectively he/she is operating as a dealer.

figure 7: <b>WINDEAL </i>for Money market</i></b> mismatch (gap) report

figure 7: WINDEAL for Money market mismatch (gap) report

The system provides various levels of dealing complexity that can be set to match the differing skills of those using it. It also allows control (perhaps best exercised by a Course Supervisor or a trainee's mentor), over the currencies and products traded, volumes of incoming calls and the proportion of one type of call to another - again so that these may be matched to different skill levels.

A WINDEAL for Money market simulation session is based upon a Scenario consisting of a pre-constructed set of News Headlines of statistical announcements and world events, and an associated (generated) set of interest rates (short dates and fixed periods out to one year) which change throughout the day in response to the events. The rates are created afresh for each session (unless a scenario from a previous session is requested) and form a control framework within which the system generates a random series of calls from customers, brokers and the corporate dealer - giving a genuine feel of what can happen in the real world.

Scenarios can be constructed for one, two or a maximum of three currencies. figure 8 below details an example of the Training Administratorís scenario update screen facility. US Dollars are a default value with the other two specified through the Administration function. All currencies can be input with correct ISO codes, effective dealing dates and interest calculation bases.

figure 8: <b>WINDEAL </i>for Money market</i></b> scenario writing/update screen

figure 8: WINDEAL for Money market scenario writing/update screen

Three complete Scenarios (essentially sets of news flashes with controls for generating rates) are provided in the package. A procedure for writing new scenarios - or changing those supplied - and for changing the permanent system parameters - is provided. The system also allows temporary session changes of many of the System Parameters. These latter mentioned changes will be active for the current session only, and are able to be amended either at start-up or during a session that has been Ďpausedí.

Unlike a bankís spot exchange position which can be square at the outset of a dealing day, a money market dealer is never square. There is always an on-going day-to-day cash position to manage. This is replicated by varying Start-up positions being input into the system by the Course Supervisor. Combine these start-up positions with variable rates scenarios and it can be seen that limitless virtual market scenarios can be created. The trainee can be provided with a predominantly short cash position (long term assets exceeding liabilities) with a rising interest rate environment or a long cash position with the reverse trend.

A WINDEAL for Money market user, sitting at his/her desk, deals in one to three currencies with the ability to cover or hedge all positions arising from the start-up position and all other transactions effected by the trainee him/herself during the dealing day. Whatever choice is made, the simulated Market Rates screen displays show short date and fixed date interest rates. Even the Reuters-style display of interest rate spreads is parameterised - London = Offer/Bid or International = Bid/Offer for the selected dealing currency(ies). The trainee can call his bank counterparties, interbank brokers or Futures broker at will and, depending on training level selected, at random intervals, they and the corporate dealer will call the trainee.

Because trainees and/or supervisors, by way of debriefing, may wish to go back over events of the dealing day to check what happened and why, A WINDEAL for Money market maintains full records of what occurs during a session so that these may be inspected, at any time, on screen or via a word-processing system (Windows Write is used to display these standard text files).

Management information available in the system is as comprehensive as possible with onscreen and printable reports available for a Blotter (a list of all deals done during the dealing session), detailed cashflows showing movement, net and cumulative totals for each dealing date in the simulation, portfolio reportage of all short term securities and derivative trading positions, itemised profit and loss reportage - produced on a mismatch (gap) evaluation basis, a liquidity report, a balance sheet, a list of deals with each counterparty, the overall positions of all customers (for credit limit checking purposes), and graphs showing yield curves per product and how they have changed during the dealing day up to the time of any enquiry. Newsflashes up to the present time appear on a rolling display and may be reviewed at any time. A hint about the effect of the current news item may be obtained (if these have been set up by the training administrator).

Also maintained is the Deals and Performance Log (which also shows all deals and the user's Performance indicators). This provides the basis for comprehensive debriefing to be effected by the training administrator after any dealing simulation session. There is also available a Conversation Log (a record of the actual "conversations" between user, customers, brokers and the Corporate Dealer) to be used in similar fashion to the tape recordings of dealersí conversations in the real world.

Further information on the operation and use of WINDEAL for Money market is separately available from the company mmtw@lywood-david.co.uk


Lywood David International Limited, Warren Cottage, Melfort Road, Crowborough,
East Sussex, TN6 1QT United Kingdom