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SOUTH AFRICAN QUALIFICATIONS AUTHORITY 
REGISTERED UNIT STANDARD: 

Identify and explain different types of derivatives 
SAQA US ID UNIT STANDARD TITLE
13380  Identify and explain different types of derivatives 
ORIGINATOR
SGB Banking and Micro Finance 
PRIMARY OR DELEGATED QUALITY ASSURANCE FUNCTIONARY
BANKSETA - Banking Sector Education and Training Authority 
FIELD SUBFIELD
Field 03 - Business, Commerce and Management Studies Finance, Economics and Accounting 
ABET BAND UNIT STANDARD TYPE PRE-2009 NQF LEVEL NQF LEVEL CREDITS
Undefined  Regular  Level 4  NQF Level 04 
REGISTRATION STATUS REGISTRATION START DATE REGISTRATION END DATE SAQA DECISION NUMBER
Reregistered  2018-07-01  2023-06-30  SAQA 06120/18 
LAST DATE FOR ENROLMENT LAST DATE FOR ACHIEVEMENT
2024-06-30   2027-06-30  

In all of the tables in this document, both the pre-2009 NQF Level and the NQF Level is shown. In the text (purpose statements, qualification rules, etc), any references to NQF Levels are to the pre-2009 levels unless specifically stated otherwise.  

This unit standard does not replace any other unit standard and is not replaced by any other unit standard. 

PURPOSE OF THE UNIT STANDARD 
This unit standard is for people who are able to demonstrate an understanding of different types of derivatives.

The qualifying learner is capable of:
  • Demonstrating an understanding of fundamental principles of derivative markets
  • Demonstrating an understanding of what a future and option is
  • Defining and understanding a Forward Rate Agreement
  • Defining and explaining the meaning of a SWAP
  • Defining and explaining the meaning of a Warrant and its role in the market
  • Understanding the Settlement period in the Derivatives market 

  • LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING 
    Persons credited with this Unit Standard are able to work within a treasury or investment environment and to understand the commercial objectives of the operation in which they work. It is required that learners are competent in mathematics at an NQF level four. 

    UNIT STANDARD RANGE 
    Types of derivatives include Futures, Options, Warrants, Swaps, and Forward Rate Agreements 

    Specific Outcomes and Assessment Criteria: 

    SPECIFIC OUTCOME 1 
    Demonstrate an understanding of fundamental principles of derivative markets 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The term derivative is explained. 

    ASSESSMENT CRITERION 2 
    2. A time value calculation is understood and performed. 

    ASSESSMENT CRITERION 3 
    3. The concept "term structure of interest rates" is defined and understood. 

    ASSESSMENT CRITERION 4 
    4. The meaning of different yield curves is recognised and interpreted. 

    ASSESSMENT CRITERION 5 
    5. The participants in the derivatives market are identified, and their role is defined. 

    SPECIFIC OUTCOME 2 
    Demonstrate an understanding of what a future and option is 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The difference between a future, option, forward and "over the counter" (OTC) is distinguished and defined. 

    ASSESSMENT CRITERION 2 
    2. The difference between calls and puts is distinguished. 

    ASSESSMENT CRITERION 3 
    3. The intrinsic values/strike prices/premium and expiry is defined and understood. 

    ASSESSMENT CRITERION 4 
    4. The concepts of "in the money", "out of money" and "at the money" are defined and understood. 

    ASSESSMENT CRITERION 5 
    5. The use of options are identified as hedging instruments. 

    SPECIFIC OUTCOME 3 
    Define and understand a forward rate agreement 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The distinctive features of Forward Rate Agreements are explained. 

    ASSESSMENT CRITERION 2 
    2. The role and applications of Forward Rate Agreements within the derivatives market are explained. 

    ASSESSMENT CRITERION 3 
    3. The fair rate of Forward Rate Agreements is derived from the term structure of zero-coupon rates. 

    ASSESSMENT CRITERION 4 
    4. The applications of Forward Rate Agreements are explained. 

    SPECIFIC OUTCOME 4 
    Define and explain the meaning of a SWAP 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The definition and terminology of the different interest rate SWAPS is explained. 

    ASSESSMENT CRITERION 2 
    2. A vanilla SWAP is defined and explained. 

    ASSESSMENT CRITERION 3 
    3. The role of interest rate SWAPS in the derivatives market is identified and explained. 

    ASSESSMENT CRITERION 4 
    4. The various other SWAPS within the derivatives market are identified and explained. 

    SPECIFIC OUTCOME 5 
    Define and explain the meaning of a warrant and its role in the market 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. Different types of warrants in the derivatives market are distinguished. 
    ASSESSMENT CRITERION RANGE 
    Call warrant, put warrant.
     

    ASSESSMENT CRITERION 2 
    2. The conditions under which warrants will or won't be exercised are identified. 

    ASSESSMENT CRITERION 3 
    3. The various pricing methods of warrants are recognised and identified. 

    SPECIFIC OUTCOME 6 
    Understand the settlement period in the derivatives market 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The timing and appropriate period of settlement is understood. 

    ASSESSMENT CRITERION 2 
    2. The clearing system used in settlement is understood. 

    ASSESSMENT CRITERION 3 
    3. The basic understanding of relevant rules and regulations applied to settlement is understood. 


    UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS 
    Accreditation for this Unit Standards shall be from the relevant education and Training Quality Assurer through formative and summative assessment by a registered Assessor. Assessment should be contextual and be conducted in the workplace as far as possible.

    The relevant NSB and SGB should be notified of any feedback related to this qualification.
  • Assessors must be registered as an Assessor with the relevant ETQA
  • Moderators must be registered as assessors with the relevant ETQA
  • Training providers must be accredited by the relevant ETQA
  • Moderation should include both internal and external moderation where applicable
  • The relevant ETQA will co-ordinate all moderation activities in accordance with their policies and procedures 

  • UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE 
    Learners can:

    1. Recognise and explain different types of derivatives.
    2. Understand and perform relevant calculations. 

    UNIT STANDARD DEVELOPMENTAL OUTCOME 
    N/A 

    UNIT STANDARD LINKAGES 
    N/A 


    Critical Cross-field Outcomes (CCFO): 

    UNIT STANDARD CCFO IDENTIFYING 
    The learner is able to identify and solve problems relating to the completeness, correctness and accuracy of the information received. 

    UNIT STANDARD CCFO COMMUNICATING 
    The learner is able to communicate effectively using basic mathematical and/or language skills in the modes of oral and/or written persuasion when communicating with relevant parties regarding the application. 

    UNIT STANDARD CCFO SCIENCE 
    The learner is able to use science and technology effectively and critically in applying the use of the company system to process applications. 

    UNIT STANDARD ASSESSOR CRITERIA 
    N/A 

    REREGISTRATION HISTORY 
    As per the SAQA Board decision/s at that time, this unit standard was Reregistered in 2012; 2015. 

    UNIT STANDARD NOTES 
    Terminology:

    Calls, Future option, hedging instruments, "in the money", "out of money" , "at the money", forward rate agreement, " over the counter", puts, term structure of interest rates, time value calculation, vanilla swap, warrant, zero coupon rates.

    Values:

    The use of tasks and materials in the learning event plan should not discriminate against learners on any grounds prescribed in the Bill of Rights and should promote the orientations outlined in the critical cross-field outcomes. 

    QUALIFICATIONS UTILISING THIS UNIT STANDARD: 
      ID QUALIFICATION TITLE PRE-2009 NQF LEVEL NQF LEVEL STATUS END DATE PRIMARY OR DELEGATED QA FUNCTIONARY
    Elective  20185   Further Education and Training Certificate: Banking  Level 4  NQF Level 04  Reregistered  2023-06-30  BANKSETA 


    PROVIDERS CURRENTLY ACCREDITED TO OFFER THIS UNIT STANDARD: 
    This information shows the current accreditations (i.e. those not past their accreditation end dates), and is the most complete record available to SAQA as of today. Some Primary or Delegated Quality Assurance Functionaries have a lag in their recording systems for provider accreditation, in turn leading to a lag in notifying SAQA of all the providers that they have accredited to offer qualifications and unit standards, as well as any extensions to accreditation end dates. The relevant Primary or Delegated Quality Assurance Functionary should be notified if a record appears to be missing from here.
     
    1. Absa Learning & Development 
    2. Bidvest Bank 
    3. Chartall Business College 
    4. Cornerstone Performance Solutions (Pty) Ltd 
    5. Felix Risk Training Consultants 
    6. Firstrand Bank - Benmore 
    7. Nedbank Ltd 
    8. The Facilitation Workshop 



    All qualifications and part qualifications registered on the National Qualifications Framework are public property. Thus the only payment that can be made for them is for service and reproduction. It is illegal to sell this material for profit. If the material is reproduced or quoted, the South African Qualifications Authority (SAQA) should be acknowledged as the source.