SAQA 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.
SOUTH AFRICAN QUALIFICATIONS AUTHORITY 
REGISTERED UNIT STANDARD: 

Demonstrate an understanding of the concepts and conventions of the foreign exchange market 
SAQA US ID UNIT STANDARD TITLE
13398  Demonstrate an understanding of the concepts and conventions of the foreign exchange market 
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  10 
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 
Persons credited with this Unit Standard are able to understand and apply the fundamental concepts of Foreign Exchange markets.

The qualifying learner is capable of:
  • Describing the trading practices in the spot market in the major currencies
  • Demonstrating an understanding of the derivative instruments and markets
  • Demonstrating an understanding of the mechanics of trading using outrights and swaps
  • Identifying the roles and responsibilities of the back office and explaining the importance of timely and accurate settlement
  • Identifying the different types of risk in the markets and describing the use of limits to mitigate risk 

  • LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING 
    The learner must be able to work within a treasury, foreign exchange or investment environment and to understand the commercial objectives of the operation in which he works. 

    UNIT STANDARD RANGE 
    Within the context of a treasury, foreign exchange or investment environment. 

    Specific Outcomes and Assessment Criteria: 

    SPECIFIC OUTCOME 1 
    Describe the trading practices in the spot market in the major currencies 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The main markets, their size and location are identified. 

    ASSESSMENT CRITERION 2 
    2. The differences between base currencies and quoted currencies are explained. 

    ASSESSMENT CRITERION 3 
    3. The spot rates are calculated and used as market makers and market takers. 

    ASSESSMENT CRITERION 4 
    4. Buying and selling rates, and direct and indirect quotations, are interpreted and demonstrated. 

    ASSESSMENT CRITERION 5 
    5. The cost of carry when rolling positions, how it is calculated and its role in the trading arena is determined. 

    ASSESSMENT CRITERION 6 
    6. The importance of liquidity is explained. 

    SPECIFIC OUTCOME 2 
    Demonstrate an understanding of the derivative instruments and markets 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The definitions and uses of interest rate derivatives, forward rate agreements, rand overnight deposit swaps and straight swaps are demonstrated. 

    ASSESSMENT CRITERION 2 
    2. The derivation of forward/forward interest rates, Forward Rate Agreements (FRAs) and short-term interest rate futures is explained. 

    ASSESSMENT CRITERION 3 
    3. The main characteristics of options and their use as a hedging instrument is explained. 

    ASSESSMENT CRITERION 4 
    4. The extension and calculation of forward contracts are simulated and appropriate calculations made. 

    SPECIFIC OUTCOME 3 
    Demonstrate an understanding of the mechanics of trading using outrights and swaps 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The role of spot and interest rate differentials and the concept of arbitrage is explained. 

    ASSESSMENT CRITERION 2 
    2. The features of a foreign exchange outright and a foreign exchange swap are contrasted. 

    ASSESSMENT CRITERION 3 
    3. The role of foreign exchange and foreign exchange swaps in the money markets are correctly explained. 

    ASSESSMENT CRITERION 4 
    4. The derivation of forward rates using the basic equation for calculating points is correctly described. 

    ASSESSMENT CRITERION 5 
    5. The basics of foreign exchange options are correctly listed. 

    SPECIFIC OUTCOME 4 
    Identify the roles and responsibilities of the back office 
    OUTCOME NOTES 
    Identify the roles and responsibilities of the back office and explain the importance of timely and accurate settlement. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The need for separation of dealing function from settlement is correctly explained. 

    ASSESSMENT CRITERION 2 
    2. The workflow of a typical transaction and the responsibilities of back office are described. 

    ASSESSMENT CRITERION 3 
    3. A distinction is made between paper based and electronic based ownership. 

    ASSESSMENT CRITERION 4 
    4. The matching and netting process is described, and basic netting calculations are performed. 

    ASSESSMENT CRITERION 5 
    5. The different types of clearing and payment systems are described, along with their specific risk elements. 

    SPECIFIC OUTCOME 5 
    Identify the different types of risk in the markets and describe the use of limits to mitigate risk 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The difference between price risk in currency and interest rates is highlighted. 

    ASSESSMENT CRITERION 2 
    2. The difference between transaction, translation and economic risk are explained. 

    ASSESSMENT CRITERION 3 
    3. The principles of counter-party, delivery and related risks are correctly explained. 

    ASSESSMENT CRITERION 4 
    4. A limit structure and its operations are correctly described. 


    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:
  • Apply knowledge of derivative instruments and markets
  • Apply understanding of trading practices in the spot market
  • Apply calculations of forward contracts 

  • 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 ORGANISING 
    Organise and manage oneself and ones activities responsibly and effectively. 

    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:

    The learner should be able to define and contextualise the following terms:

    Arbitrage, Derivative Instruments, Forward Contracts, Forward Rate Agreements, Hedging instruments, Interest Rate differentials, Outrights, Overnight deposit swaps, Options, Spot 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 
    Elective  57901   Further Education and Training Certificate: Credit Management  Level 4  NQF Level 04  Reregistered  2023-06-30  FASSET 


    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.