- Contract types
- Spot, Forward, Swap, NDF
- Order types / Market / Limit / One starts the other
- FX Options (Call / Put)
- FX futures contracts
- Setup of the currency table / forward rate tables
- Setup of dealer desks
- Setup of interfaces to trading systems
- Foreign exchange dealing
- Fees and commissions
- Swift messaging
- Deal confirmations
- Settlement/ delivery
- Revaluation (rebate method / Straight line method / Straight line funding method)
The FOREX module encompasses the following products:
The buying or selling of foreign currency (normally within seven calendar days of the date the contract is made unless a shorter period is cus- tomary or required in the local market). The exchange rate applied is called the spot rate.
A forward contract is the buying or selling of foreign currency for delivery in the future, i.e. at a date later than the locally defined spot date. The exchange rate applied is called the forward rate.
A swap contract is the exchange of currencies at spot with one or more associated forward deals, or “legs”, where one currency amount is fixed. The different rates applied on the spot and forward deals reflect the interest rates of the respective currencies. Both spot and forward transactions are usually, but not necessarily, done with the same Counterparty. T24 maintains the link between the spot and forward deals automatically and processes them as a unit.
The buying or selling of foreign currency where the delivery may take place at any time between two specified dates at the customer’s choice without incurring any penalty costs. This option occurs when the customer decides to take delivery of all, or part, of the transaction before the final value date. The rate applied caters for the fact that the bank may need to conclude the deal at any date up to the maturity date.
This is a standard NDF transaction type, which has an agreed rate fixing date (usually 2 working days before settlement date). With this type the customer cannot change the fixing date.
An exotic NDF is a variation that allows the fixing date to be set at any date during the life of the transaction before the vanilla date. If the NDF is fixed and settled “early”, the fixing profit or loss is discounted. The discount amount will be amortised from the settlement date to the value date of the NDF.
A Non Deliverable Forward (NDF) is classed as an event where a currency is unable to be settled. Because of this the deal must be fixed at a time and from a rate source arranged at the time of the original trade. When the rate is fixed on the fixing date, the settlement will be a net set- tlement in the deliverable currency only. This is calculated by using the difference between the original FX rate and the fixing rate.