BAFI1002 FINANCIAL MARKETS

GUIDELINES FOR THE FOREX REPORT

The dealing session assessment which includes the Market View Presentation and the Forex
Report is worth 30% of your overall grade for this course.

• The Market View Presentation is worth 10 marks and due in week 7.

• This final Forex Report is worth 20 marks and will be due in week 10.

This document discusses the second part of the assignment and the required contents of the –
Forex Report.

Content of the Reports

The following structure and guidelines are provided to assist you in writing your reports.

Executive summary or synopsis

• Your report must include an executive summary or synopsis.

An executive summary essentially summarises the entire report. Note that a simple
Google search of “RMIT Executive Summary” yields the following result:
https://emedia.rmit.edu.au/learninglab/content/beginning.
We advise you to read through this if you do not know what is expected for an
executive summary. The best way to understand executive summary is the following:
Your senior manager is a very busy person and will most likely not have the time to
read through the report, hence an executive summary is a way to communicate the
entire report as an “overall” picture. Please note that the executive summary counts
towards the word count for the report.

Introduction

Answer to the following questions will make a decent Introduction:

(a) What is the name of your organisation?
(b) Are you a bank or a corporate?
(c) What are your objectives – both primary and secondary?
 (d) How do you plan to achieve your objectives at the beginning of the dealing session?
(e) What factors does your particular team need to take into account in trying to
achieve your objectives?

Market View

You are required to provide your Market View report here.

•
In your market view you should provide some prediction on two currency pair for the
next three month. You will have to state wether the currecy will value will go up or
down. Do not simply quote other people’s opinions. You should present your
opinion, and explain in your own words why you hold that opinion in a way that
shows that you understand the theory behind the determination of the exchange rates
(topic 2 and 4B). You can certainly quote evidence that supports your opinion, and this
evidence must be correctly referenced (do not submit copies of your collected articles
with your report). For your view you should use at least five references.
Finaciala nd econimic data should be sourced from Thomson Reutres Eikon.
•
For the final report, please review your market view presentation again and write a
summary of your market view. Do ensure that you incorporate the feedback received
from your trading instructors in your final version of the Market View. It is critical to
understand that the market view links the rest of the report, therefore having a subpar
market view will result in the rest of the report also being subpar.
Very important: You must have a market view prior to the commencement of
your second traling session as you will be trading according to your view during
that session. Hence why you are required to prepare and present your market
view at the start of your session.

Trading strategy

In your Dealing room sessions, you will be assigned certain objectives.

• First explain how you intend to achieve your primary objective. It is possible that
you may have devised some tools or engines that helped you to get an idea of when to
square for example. If you have, please discuss it! It is encouraged and unique
strategies are rewarded if explained properly. Anything that you feel may have helped
you prepare for your dealing session should be discussed here. Note that if you’re a
 corporation you will probably have a scenario that involves you to trade currencies
that are not a part of your market view; this is expected. If you’re a bank you’ll need
to devise an appropriate trading strategy as you will be most likely dealing with all 5
currencies.

• Then, look at your secondary objective and given your view about current and future
market conditions (based on your market view), you should devise a strategy that you
will try to implement during the session. This strategy will specify how you will go
about achieving your secondary objectives in a way that benefits your organisation –
which currencies you will buy or sell. Alternatively put, for the secondary task, you
need to devise a trading strategy that directly involves what your market view was. For
example, if you predict that in the next 3-6 months that the AUD will depreciate
against the USD, how would you set up a trading strategy to take advantage of this
depreciation? Where appropriate, you should also devise a speculation strategy which
will allow you to create a portfolio of currencies which will enable your organisation
to take advantage of your predicted changes in the exchange rates.

The market view and your strategy (based on that view) are critically important
components of the report. You will not get a passing grade on the report without
these components.

Performance analysis

The market view and trading strategy combined were your plan “expectation” for the dealing
simulation. Now, you will write about what actually happened in the dealing session. The
performance analysis is about comparing the real outcomes with your initial expectations.

• Discuss what actually happened during the session. Were you able to use your
strategy? Why or why not? Did you achieve your objectives? Why, or why not?
Justify.

• Use the output from your accounts section to discuss your performances: what are
your final positions, realised profit or losses, average rates, etc. Ultimately, to what
 extent have you been able to complete your tasks (primary and secondary)? Report
how your profit or loss was made. To clarify, your profit or loss can be made by two
different ways: 1. It is made by negotiating market rates such that you buy low, sell
high. 2. The profit/loss calculation in the trading system uses the mid-market rate
supplied by Eikon to calculate your opening balance in the AUD, and your net closing
balance in the AUD. You would be required to carefully study your trading reports in
order to determine whether if the profit figure comes from (1), (2), or both. In addition
to that, a good idea would be to refer (a group of) trades that could have really put
your group in a good position. For example, “Trades 15-21 and 24 is where we got a
really good deal and managed to raise the JPY for the lowest cost possible, therefore
contributing to our minimal losses incurred”. Making specific reference to your trades
is recommended.

• Do you feel that you have set up your organisation to take advantage of movements in
exchange rates, if they move as you have predicted? Why or why not? (This is more
important than making a profit during the session.). This requires you to compare
what your trading strategies were, against the movement of the spot rates during the
three hour dealing session. You should justify why your trading strategies worked or
failed. For example, at the end of the FX session, did you finish up being long or short
of AUD, rather than maintain a square position as desired?

• Can you identify any transactions where you have bought and sold the same currency
and made a profit or a loss? If you were buying a currency, how far were you off your
benchmark? How the rates that obtained do compare to the rate/prices for the day?

• If you are a corporate, you are unlikely to make a profit for your primary objective
over the course of the session. There will be profit only if you have bought and sold
the same currency at favourable rates. It is important to comment on whether you
have set up your organisation so that it will be able to take advantage of future
movements in the rates (minimise cost).

• Looking at your trade corresponding to you secondary objective you should explain
which currencies you have bought and sold expecting to make a profit in the next few
month based on you market view.
 • Justify your actions and your final positions to your Senior Manager. If you made an
error during the session, explain what occurred and what you have learned from it.

• Analyse the session in terms of how you performed as a team. How did you divide
your responsibilities? Outline what your learned from the session. How could you
improve in future sessions?

The idea of the performance analysis is to basically fully justify your final positions to your
senior manager. It is ok to make mistakes and you will not be penalised, for example, if you
don’t achieve a profit in the secondary objective. What we are looking for is for you to be
able to fully justify your final positions and to explain any errors that you may have made in
the dealing session, and why you made them, rather than analyse you directly on performance
(profit). The only time we consider your performance in the dealing session is if we notice
that you have made extremely few trades (to quantify, this would be 10 trades or less), or for
determining the bonus mark that will be awarded to the best bank and corporation.

Conclusion
• A conclusion is compulsory. A conclusion is essentially to answer the introduction.
Failure to present a conclusion will result in loss of marks.

Appendices
Appendices are useful to basically add additional things that may not be useful elsewhere.

• Your appendices should include all your dealing sheets. Label appendices clearly and
refer to them in the body of the report. Ensure that you include cents in your accounts
as every cent must be accounted for.

• In this report, attach your trading reports that you saved at the end of the session. You
MUST include the reports as they are basically your proof for all positions concerned.
Failure to do this will result in a major loss of marks. Note that you should not include
diagrams or graphs in the appendix, these should go in the main body of your report.

Reference List
• The reference list is compulsory. Failure to provide a reference list will result in loss
of marks. The format of your reference list should follow the Harvard referencing
style. Ensure you do your references properly.
Report presentation and format

Formatting is important. Reports are to be well written and students are expected to follow
the guidelines set out in the document entitled “Written Reports and Essays: Guidelines for
Referencing and Presentation in RMIT Business”. This can be found at the web site:

http://prodmams.rmit.edu.au/s9sx559hurvc.rtf

There is considerable information in this document and it is well worth reading. There is also
material on the web site: http://www.dlsweb.rmit.edu.au/bus/public/referencing/

• The report should not exceed 2,500 words (with a 10% leeway) in total. This excludes
the table of content and reference list. The document should be formatted following
the guideline below and the RMIT presentation guidelines:

o Text should be justified

o 1.5 line spacing
o Character size 12 point
o font, Times New Roman,
o 1”margins.

• References should be presented using the Harvard (author-date) referencing

system. A copy of the referencing and presentation guidelines is available at
http://mams.rmit.edu.au/s9sx559hurvc.rtf

• Your final report should be presented as a business report to your Senior Manager.
As such, it should be clear and concise. Include all relevant information, but only
relevant information.

• You are the treasury team for your company. You are free to make any decision that
you believe will benefit your firm. However, you must be able to explain and justify
your actions and convince your Senior Manager that you did a good job.

• While participating in the treasury dealing simulations you will be expected to follow
appropriate trading etiquette and standards of behaviour. These will be outlined
 to you during the trading practice sessions. Failure to comply with these requirements
will result in a 1 or 2 mark penalty against your written report mark.

This is a group assignment and both copying and plagiarism will be heavily penalised.
Turnitin will be used to identify plagiarism issues.

Submitting the report

This report should be submitted online via canvas.

Marking Rubric

The next page provides the detailed marking rubric which the instructors will follow while
marking this assignment. You should ensure that you comply with the requirements of the
assignment.
Dealing Report Marking Sheet:
Final report 20%
Executive summary or synopsis (1 point)
Does this section summarise the report?
Done Well □ Needs Work □ Not Present □
Introduction (2 point)

Does this state: The name of the organisation? Bank or a corporate? The objectives/tasks – both primary
and secondary? How the group plan to achieve its objectives at the beginning of the dealing session?
Done Well □ Needs Work □ Not Present □
Market view (3 points)
Does this section tell us what is the group’s view regarding current and future market conditions on
currencies? Discusses at least one currency pair? Is this view clearly justified using information regarding the
economic factors that influence the foreign exchange rates?
Contains at least five external sources (news article or outside reports)?
Does this section show that the group understands the theory behind the determination of the exchange
rates?
Done Well □ Needs Work □ Not Present □
Trading strategy (5 points)
Does this section tell us how the group intends to achieve its primary objective? Its secondary objective? Is the
trading strategy regarding the secondary task (speculation) based linked and in line with the market view.
Done Well □ Needs Work □ Not Present □
Performance analysis (5 points)
Does this section discuss what actually happened during the session? Was the group able to stick to its
strategy? Explain why or why not? Tells us if the group has achieved its objectives?
Does this section contain? Output from your accounts section and discussion regarding the group
performance: what are your final positions, realised profit or losses, average rates, etc…. Ultimately, to what
extent have you been able to complete your tasks (primary and secondary)?
Done Well □ Needs Work □ Not Present □
Are both the primary and secondary task/objective been discussed.
Does it tells us if the group feels that it has set up the organisation to take advantage of movements in
exchange rates, if they move as you have predicted? Why or why not?
Are the group actions and final positions justified to the Senior Manager. Has the group explained its
mistakes and what it has learnt from these mistakes?
Done Well □ Needs Work □ Not Present □
Does the group tell us how it performed as a team? How they divided responsibilities, what they have
learnt from the session, how the group could improve in future sessions?
Done Well □ Needs Work □ Not Present □
Conclusion: Is there a conclusion? Does the conclusion summarize the report? (1 point)
Done Well □ Needs Work □ Not Present □
Format and other (3 point)
References: Is there a reference list? Does the reference list format follows format the Harvard referencing
style. Is there clear in text-citation? Format: Time new roman, 12 points, table of content,… Table and
figure: Are all the tables and figure labelled, numbered and referenced? Appendices: Are all the dealing
sheets and account summaries presented in the appendices? Are the appendix clearly labelled?
Done Well □ Needs Work □ Not Present □