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Exchange Rate Risk

  • Currency Spot

    A Currency spot operation is purchase or sale of one currency for another currency subject to a rate agreed in advance by the participating parties. Settlement of the transaction takes place as standard with a spot value date, i.e. two working days after the date the transaction is concluded.

  • Currency Forward

    The Currency forward product is purchase or sale of one currency for another currency subject to a rate agreed in advance by the participating parties. Settlement of the transaction takes place with a forward value date (i.e. longer than 2 working days from the date the transaction is agreed).

  • Currency Swap

    A Currency swap (or also Foreign exchange swap) operation is a combination of two transactions, spot and forward. This product consists in sale of one currency for another currency with settlement no later than on the spot value date and buyback/resale with settlement on the forward value date. Both transactions are concluded at the same moment.

  • Currency Option

    The Currency option product represents the right (option) to purchase or sell a specific amount of one currency for another currency subject to the foreign exchange rate agreed by the participants in advance on the agreed date.

  • Binary Currency Option

    They buyer of a Binary option invests amount X (the premium) in expectation of receiving higher amount Y (the nominal amount) subject to meeting of defined conditions relating to development of the reference exchange rate.

  • Barrier Currency Option

    The Barrier currency option allows the buyer to hedge his or her position against undesirable development of currency rates. Barrier currency options can be divided into ”knock in“ and ”knock out“ types. Knock in type options behave in the same way as currency (call/put) options, if they are activated during their existence. Knock out options behave in the same way as currency (call/put) options, if they are deactivated during their existence (they then expire). The level of risk accepted results from the character of the Barrier currency options.

  • Cross Currency Swap

    Cross Currency Swap is an agreement on exchange of principals of two currencies and the interest costs relating to these. Party A undertakes to purchase funds in currency 1 from party B for a certain amount of funds in currency 2, on a fixed date and also undertakes to sell back the same amount of funds in currency 1 for a certain amount of funds in currency 2 at the same exchange rate and on a later fixed date, no later however than within one year from conclusion of the transaction. Over the course of the transaction, the parties mutually pay interest on the currencies, which they purchased from each other at the start of the transaction.

  • Forward Corridor

    Forward Corridor allows the client to implement a currency forward for an agreed nominal amount for a more advantageous exchange rate than usual for zero initial costs.

  • Forward Scoop

    Forward Scoop allows the client to implement a currency forward for an agreed nominal amount for a more advantageous exchange rate than usual for zero initial costs.

  • Forward Boost

    Forward Boost allows the client to implement a currency forward for an agreed nominal amount for a more advantageous exchange rate than usual for zero initial costs.

  • Mini Range Forward

    Mini Range Forward allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs.

  • Extendible Forward

    Extendible forward allows the client to implement several currency forwards for a significantly more advantageous exchange rate than usual for zero initial costs. However, the client does not know the exchanged nominal or whether the exchange will take place at all until the maturity date of individual currency forwards.

  • Ratchet

    Ratchet allows the client to implement a set of currency forwards for a more advantageous exchange rate than usual for zero initial costs. The resulting right or obligation of the client to exchange the standard or increased transaction nominal and the resulting exchange rate depends on the development of the reference spot rate, more precisely, on breaching of the defined barriers.

  • American Forward

    American forward is modification of currency forward, which includes elements of an American type of currency option. The counterparties agree on the usual parameters such as the currency pair, the nominal and the maturity date. The buyer of the American forward is also entitled to request (at any time in the determined period given by the Start date and the maturity date) partial exercising (at any time until the maturity date). If the buyer of the American forward does not exchange the whole nominal by the maturity date of the American forward, the remaining amount of the nominal is settled on this date.

  • Mark-to-market Forward

    Mark-to-Market Forward allows the client to secure himself or herself against exchange rate risk and at the same time, limit the maximum risk of negative revaluation in the event of inauspicious development. The parties to the transaction agree on a forward exchange rate and on a rate limiting the maximum risk of negative revaluation.

  • Forward Accumulator

    Forward Accumulator allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. However, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward Accumulator.

  • Forward Accumulator with Knock-out Barrier

    Forward accumulator with Knock-Out barrier allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. On the other hand, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward accumulator.

  • Permanent Forward Accumulator

    Permanent forward accumulator allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. On the other hand, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward Accumulator.

  • Permanent Forward Accumulator with Knock-out Barrier

    Permanent forward accumulator with Knock-Out barrier allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. However, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward Accumulator.

  • Soft Forward Accumulator

    Soft forward accumulator allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. On the other hand, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward accumulator.

  • Soft Forward Accumulator with Knock-out Barrier

    Soft forward accumulator with Knock-Out barrier allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. On the other hand, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward accumulator.

  • Extendible Bonus-Reset Forward

    Extendible Bonus-Reset Forward allows the client to implement several currency forwards for a significantly more advantageous exchange rate than usual for zero initial costs. However, the client does not know the resulting exchange rate or exchanged nominal until the maturity date. The transaction can be extended by the extendible period.

  • Extendible Structured Knock-In Forward

    Extendible Structured Knock In Forward allows the client to implement several currency forwards for a significantly more advantageous exchange rate than usual for zero initial costs. However, the client does not know the resulting rate, the exchanged nominal or even whether the exchange will take place at all until the maturity date of individual currency forwards.

  • Target Accumulator

    Target accumulator allows the client to implement a series of currency forwards for a more advantageous exchange rate than usual for zero initial costs. The client does not know the precise nominal, which will be exchanged, until the maturity dates of the individual forwards. If the target amount is accumulated, the transaction ends and the remaining currency forwards are not settled at all.

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