Finance Money Market Liquidity Management Products Explained

To illustrate the fundamentals of professional liquidity management, this section introduces the liquidity risk management in banks.

You will learn why banks create maturity mismatches and how these mismatches expose them to liquidity risk.

One of the main threats is off-market refinancing interest rates, which can trigger a short-term bank default.

To manage this risk, banks establish a dedicated Liquidity Risk Committee that measures liquidity exposure and implements procedures to address liquidity problems.

In addition to these procedures, banks use money market instruments to manage cash and liquidity, such as repurchase agreements and money market security programs.

Finally, we cover the role of central banks during money market crises and the key minimum liquidity standards introduced after 2008.

In May 2026, the ECB proposed a stronger macroprudential framework for non-bank financial intermediation, also known as shadow banking. A central part of this proposal is the management of liquidity risk.

In this lecture, we summarize the main elements of the ECB proposal and explain how stronger regulation of leverage, liquidity risk, investor behaviour, and financial interconnectedness can help reduce systemic risk.

This lecture provides a general introduction to financial markets:

• What happens on financial markets;

• How is financial market trading organized

• An overview of the traded products: traditional and derivatives

• Financial products prices and benchmarks

Before examining money market products in more detail, this lecture introduces the money markets, where short-term investments are made in the local currency.

One of the key topics is how different interest rates can be compared, providing a foundation for financial modelling professionals to analyse and evaluate alternative short-term investment options.

The main section topics are:

• What happens on money markets that motivates trading.

• Which products are used for cash management using deposits, money market securities and repos, or derivatives for managing market risk.

• The difference between domestic and euro-markets.

• Several international day count conventions and which apply for the money markets.

• Different money market deposit types.

• What are the main money market benchmarks, such as LIBOR and recently introduced overnight rates, the euro short term rate (€ster) and the secured overnight financing rate (SOFR) in the United States.

This sections contains a 12 minute mp4 video lectures with power point slides.

To prepare the mp4 lecture, please download the pdf document that contains 3 pages of notes to the power point slides.

Normally, periodical yields and returns are annual percentages.

But not all yields are comparable. The interest amounts calculated based on the yield can be different because of applied day count conventions, coupon frequencies and interest calculation methods.

This section about basic interest rate calculations, prepares you to make calculations for money market products covered in the other sections of this course.

These calculation skills, can also be used for other financial products that are not on the topic list, such as bonds and derivatives, for example futures, forwards, options and swaps.

Don’t worry, it’s not complicated. Several examples illustrate how to make the calculations. It is not rocket science.

In this section, you will learn how interest (coupon) amounts are calculated for short-term money market investments and loans. We will introduce annual yield quoting, day count conventions, and year basis. Through practical examples, you will see how to calculate coupon interest for different investment periods and understand how the same formula can also be used to derive yields

In this section, you will learn how to calculate and interpret money market yields, also known as rates of return.

We will cover how to derive yields from coupon amounts, compare quotes based on different day count conventions, and convert yields to ensure fair comparison.

You will also explore how business day rules, date adjustment conventions, and end-of-month conventions affect interest calculations.

Finally, the section explains how yields for non-regular (broken) periods are derived from standard market quotes, supported by a practical calculation example.

In this lecture, we introduce the core principles of the time value of money. You’ll learn how present value and future value are calculated using interest rates, day count conventions, and compounding. We’ll then extend these concepts to fixed income instruments, coupon frequencies, and yield conversions, enabling you to compare annual, semi-annual, and other interest rate structures with confidence.

In this lecture, we examine the difference between true yields and pure discount rates in money market instruments. You’ll learn how interest is calculated under each convention, how to price pure discount securities, and how to convert between discount rates and true yields to make accurate investment comparisons across markets.

In this lecture, we explore yield curves and how their shapes and movements reflect market conditions and expectations.

You’ll learn to interpret normal, steepening, flattening, and inverted yield curves

After completion you understand how forward rates are derived from spot rates to reveal implied market expectations about future interest rates.

This section explains tradable money market securities, such as treasury bills, certificates of deposit and commercial paper.

The main section topics are:

• Features of different types of money market securities

• T-Bills auctions in the UK and USA

• The calculation of initial consideration at issue date of US T-bills (pure discount) and other securities (pure yield)

• Maturity considerations

• Coupon bearing certificates of deposit specifications

• The issue of commercial paper issued by companies

This sections contains a 12 minute mp4 video lectures with power point slides.

There is a quiz with 5 multiple choice questions to test your understanding and practice calculations.

To prepare the mp4 lecture, please download the pdf document that contains 3 pages of notes to the power point slides.

A repurchase agreement (repo) and a sell/buy back, are both forms of short-term loans in which securities, usually bonds, are provided as collateral.

The main section topics are:

• Repo structure and legal aspects (ICMA GMRA), legal and economic ownership

• Failure to deliver collateral (GMRA documentation)

• General collateral repos and special trading: margin application

• Calculate initial consideration, repo interest and maturity consideration for general collateral en special repos

• Classic Repo vs Sell/buy Back: reprising or margins

• Repo Custody of Collateral Arrangements for delivery repos and hold in custody (HIC) repos

• Tri-party Repo and Agents

• Different repo types

• Application of Repos by Central Banks

  
  

This sections contains a 24 minute mp4 video lectures with power point slides.

There is a quiz with 10 multiple choice questions to test your understanding and practice calculations.

To prepare the mp4 lecture, please download the pdf document that contains 6 pages of notes to the power point slides.

In this lecture, you are introduce to money market futures: exchange-traded derivatives used to manage short-term interest rate risk.