Forward Rate Agreement: An agreement undertaken by both parties for a notional currency and a predetermined term.
Forward FX Trading Agreement: An agreement for the purchase or sale of a currency against another currency at a predetermined date and exchange rate.
This product eliminates the uncertainty for companies that have deferred cash inflows-outflows. Since the exchange rate that will be in effect on the maturity date is predetermined, so is the amount. Forward FX trading transactions are performed to prevent the operational decisions of our customers from being affected by the fluctuations in the foreign exchange markets.
Swap: An exchange agreement where the parties exchange interest rates or foreign currencies.
In an interest rate swap, the parties swap interests other than the principal to access lower interest rate loans. In an exchange rate swap, the parties swap a certain amount of foreign currency at a predetermined ratio and conditions.
Options: The buyer has the right to purchase-sell a specific amount of an underlying financial instrument at a predetermined time and price (exercise price). Whether or not to exercise the right is at the discretion of the buyer.
The buyer of an FX Option, may perform the transaction at a predetermined date and exchange rate based on the market conditions or may choose to waive the right. The option premium, maturity date and the price (spot and exercise) are determined by taking into account the fluctuations in the market and interest rates. The loss of the buyer of the option is limited to the premium paid.