This shall refer to a FX transaction of which settlement date is beyond two business days after the transaction date (T+2) . A customer may establish an agreement with CUB to settle in the agreed amount, currency and exchange rate on/during a designated date/period in the future. The purpose for a FX forward transaction is primarily for locking in the exchange rate cost for FX risk aversion.
The purpose for a FX swap transaction is primarily for fund allocation, which shall mean a customer simultaneously books a FX spot (or FX forward) transaction and a FX forward transaction of the same sum but in the reverse direction.
For an option contract, the buyer has the right to ask the option seller to buy/sell a specific amount of underlying assets based on the agreed strike price on a designated date in the future. Meanwhile, the buyer needs to pay the premium to the option seller upon signing the contract.
Both parties swap interest rates during the term of the swap agreement based on the agreed currency, amount, and time period. A company may use IRS to exchange a fixed interest rate for a floating interest rate or exchange a floating interest rate for a fixed interest rate to hedge interest rate risks for the company’s assets and liabilities.
This shall refer to a transaction that both trading parties agree to exchange two different currencies at the beginning of the agreement, exchange the interests of the currencies during the term of the agreement, and then exchange the currencies back at the end of the agreement. This is an instrument for companies to hedge the foreign exchange rate and interest rate risks.
