I. The importance of a research proposal
An application for a research degree (MPhil or PhD) must be accompanied by a research proposal. The statement is an essential component of the admission process for the following reasons:
1. You may only gain admission if there is a member of staff who is able to offer adequate supervision. Your proposal will be passed to members of staff with research interests in the area who will indicate whether they are able to offer you supervision.
2. The Law School must consider whether it possesses adequate resources to support your proposed research, such as books, journals and law reports. We expect PhD students to visit other institutions and libraries but we must ensure that there is a sufficiently comprehensive ‘core’ of materials available here.
3. Your proposal is a means of assessing whether you have given sufficient thought to the demands of a PhD programme and whether you have undertaken sufficient preliminary research into the topic.
II. Choosing a subject for a PhD
Under the University of Leicester’s regulations, a PhD thesis has a maximum length of 80,000 words. It must be a work of advanced study and research, containing original work and material deemed worthy of publication (as judged ultimately by the final examiners). The key words here are “advanced study” and “original work”.
(a) advanced
For the study to be advanced, it will be inappropriate to carry out a thesis that looks like a textbook. Advanced research must be more than a purely descriptive account of the law on a given topic. For example, if you propose a thesis on the topic “The Rights of National Minorities”, this is likely to be too broad. This topic would have to be narrowed down to a specific issue (for example the concept of a national minority under the Council of Europe’s Framework Convention on National Minorities). 
(b) original
For the study to be original, either it will have to look at a new area of law on which little has been written or it can be a study that presents a new perspective on a topic where there already exists a body of academic literature. The key thing is that the work must not reproduce existing knowledge. For example, a thesis on the topic ‘Affirmative action and the case-law of the US Supreme Court’ is unlikely to be sufficiently original (given that this has been the subject of a lot of academic literature). Nevertheless, even a topic where a significant volume of literature already exists can, in some circumstances, be original if a fresh perspective on the subject-matter is provided.
III. Types of PhD research
There are a number of ways of writing a PhD. Below we have identified four possible approaches that may underpin a PhD. This is not to say that there are no other ways of undertaking doctoral research and note also that these approaches may overlap and a proposal may cover more than one of these methods. 
(a) Analysis of new and emerging areas of law
A project could examine a new area of law, on which there has been little written to date. Such projects typically examine the law and attempt to provide an explanation by placing it in a useful theoretical context or by offering a critique from a particular perspective, e.g. a feminist critique. This kind of work will mostly involve study of primary sources (legislation and case-law) as well as secondary literature in the area and in the theoretical/conceptual dimensions of the research project.
(b) Empirical Research
You might be interested in an empirical review of a particular area of law to see how the law works in practice. For example, you could investigate the effectiveness of criminal law on preventing racist speech at football matches. This kind of project would involve fieldwork as well as library study. Conducting empirical research demands considerable attention to the appropriate methodology. You will need to explain in your research proposal what research methods you are intending to use and why these are suitable for your research topic. In addition, you need to consider research ethics, such as principles of consent and confidentiality. The University has rules on research ethics and any research involving human subjects will require ethical approval.
(c) Providing new insights on established areas of law
A proposal could be a review of existing areas of law from a different perspective. This will involve taking a subject which has already been the subject of academic literature, but advancing the state of knowledge by presenting a new way of looking at or analysing the topic. If this is the type of research you wish to engage in, then your research proposal needs to indicate an awareness of the approaches already taken in the existing literature and, in general terms, how your PhD would seek to be different. 
 (d) Comparative legal research
Many of our existing PhD candidates are incorporating comparative approaches into their research. This might involve comparing national law in several countries or comparing the approach of different legal frameworks (such as the European Convention of Human Rights and the African Charter on Human and Peoples’ Rights). If you are proposing to engage in comparative legal research, you need to consider why the jurisdictions selected will be suitable for comparison. In addition, you will also need to address access to information. The University of Leicester’s library holdings are predominantly in English, so if your sources will be in another language you will need to consider how you will obtain sufficient access (eg through using other international libraries). Finally, your proposal should explain the rationale for the comparison. Purely descriptive work will not be suitable for a PhD, so why is it important or useful to make the comparison? 
IV. Preparation for the proposal
Once you have decided on the area, you should read widely – consult existing work to get a feel for the kind of academic work that has been done. If it is a completely new area where little academic literature exists, then other contemporary sources need to be reviewed, such as newspapers and periodicals in order to get a flavour of the debates surrounding this particular legal development. If possible, you should look at previous PhDs in related areas – if you have access to a University library there will be bound copies of PhDs submitted there. You will also find that some monographs were originally PhD projects and reading through these will also give you a sense of the work that is involved. 
V. Writing the proposal: a checklist
Your research proposal should be short; around 1000-1500 words is sufficient. In it, you should address the following issues: 
 Define your research question or hypothesis (ie what topic are you investigating or what proposition are you seeking to establish?)
 Explain the rationale for your research proposal. In particular, you need to explain what makes it an original contribution in relation to the existing published works on this subject.
 What methodology will you adopt? (ie will you be relying purely on library-based research or do you propose to engage in empirical research?)
 Include a bibliography of the sources you have consulted in preparing the research proposal.

For further guidance, it is recommended that you consult E Phillips and D Pugh, How to get a PhD – a handbook for students and their supervisors (4th ed, Open University Press, Maidenhead 2005), especially chapters 3 and 6.

Risks in foreign exchange dealings

Following types of risks are involved in foreign exchange dealings.

  • Market risk: Loss arising out of change in the market price of an asset
  • Liquidity risk: risk that you will not be able to easily sell your assets
  • Operational risk: Failure of internal processes, people, systems or external events
  • Legal risk: Contracts are not legally enforceable or documented incorrectly
  • Credit risk: Counterparty defaulting in payment
    • Pre-settlement: Credit risk before the maturity of a transaction
    • Settlement risk: Timing differences in cash flows
  • Country risk: Movement of funds across borders may be obstructed by sudden government controls
  • Interest rate risk: Interest rate risk or gap risk arises out of adverse movement of interest rates a bank faces on its currency swaps/forward contracts or other interest rate derivatives
Management of Risks
  • Traditional measures adopted by bank managements to manage/limit risks are:
         Limits on intra-day open position in each currency
         Limits on overnight open positions in each currency (lower than intra-day)
         Limits on aggregate open position for all currencies
         A turnover limit on daily transaction volume for all currencies
         Country wise exposure limits
Guidelines on Risk Management
  • Measure risks that can be quantified viz., exchange rate risk, interest rate risk using mathematical or statistical tools
  • Have a detailed policy on risk management (given by the Board)
  • A specific limit structure for various risks and operations
  • A sound management information system
  • Specified control, monitoring and reporting system
Risk Management Tools
  • Derivatives are management tools derived from underlying exposures such as currency, commodities, shares, etc.
  • Used to neutralize the exposures on the underlying contracts
  • Can be over the counter (OTC) i.e. customized products or exchange traded which are standardized in terms of quantity, quality, start and ending dates
Forward Contracts
  • Forward contracts: Typical OTC derivatives which involves fixing of rates (exchange rate, commodity price, etc.) in advance for delivery in future. Risk of adverse price movement is covered.
  • Forward contracts are specified at forward rates which are spot rates plus cost of carry (interest rate differential in case of foreign exchange forward)
  • The currency with lower interest rate would be at a premium in future
  • Other factors affecting forward rate
         Demand and supply for forward currency
         Perception about the movement in the currency
         Political, fiscal and trade-related conditions in the country and for the currency
  • Futures: A version of exchange traded forward contracts.
  • Standardized contracts as far as the quantity (amounts) and delivery dates (period) of the contracts.
  • Conveys an agreement to buy a specific amount of commodity or financial instruments at a particular price on a stipulated future date
  • An obligation on the buyer to purchase the underlying instrument and the seller to sell it
  • Types of Futures contracts
    • Commodities futures
    • Financial futures
    • Currency futures
    • Index futures
  • There is a margin process
    • Initial margin: to be paid at the start of a contract
    • Variable margin: calculated daily by marking to market the contract at the end of each day
    • Maintenance margin: Similar to minimum balance for undertaking trades in the Exchange and has to be maintained by the buyer/seller in the margin account
  • Options: An agreement between two parties in which one grants the other the right to buy (‘call’ option) or sell (‘put’ option) an asset under specified conditions (price, time) and assumes the obligation to sell or buy it.
  • The party who has the right but not the obligation is the ‘buyer’ of the option and pays a fee or premium to the ‘writer’ or ‘seller’ of the option.
  • The asset could be a currency, bond, share, commodity or futures contract
  • The option holder or buyer would exercise the option (buy or sell) in case the market price moves adversely and would let it lapse if it moves favourably
  • The option seller (usually a bank or a financial institution or an Exchange) is under obligation to deliver the contract if exercised at the agreed price
  • Strike price/exercise price: The price at which the option may be exercised and the underlying asset bought or sold
  • In the money: When the strike price is below the spot price (in case of a call option) or vice-versa in case of a put option the option is in the money giving gain to the buyer.
  • At the money: When strike price is equal to the spot price
  • Out of the money: The strike price is above the spot price (call option) or vice-versa (for a put option). It is better to let the option lapse here.
  • In foreign exchange market, swap refers to simultaneous sale and purchase of one currency for another (currency swap).
  • Financial or derivative swap refers to the exchange of two streams of cash flows over a defined period of time, between two counter-parties
Points for Thought
  • Corporate should be allowed to hedge upon declaration of underlying assets
  • Banks may be permitted to initiate overseas cross currency positions
  • Banks should be allowed to borrow and lend in the overseas markets
  • More participants be allowed in the foreign exchange market
  • Corporate must be allowed to cancel and re-book option contracts
  • Banks be permitted to use hedging instruments for their own ALM
  • Banks to be allowed to fix interest rates on deposits subject to caps fixed by SBP
Lecture delivered by Dr. Babar Zaheer Butt to the students of MS and Ph.D at Iqra University Islamabad Campus.