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Foreign Exchange Forward

Introduction

Forward

Forward is a binding contract in the FX market between two parties that agree to lock in the exchange rate of a currency pair to exchange on a future maturity date.

Features

A customer entrusts one bank with the buying or selling a certain currency at a contractual foreign exchange rate on a specified settlement day.

Target Customers

1. It can meet  the customer's demand for  foreign currencies transactions among some day in the future, to company's settlement of import and export trade, to the payment of L/C margin and so on.

2. Customers are required to have bank accounts in foreign currency in the bank and shall have deposited margin or have a line of credit extended by Bank of China.

Process

1.Signing the agreement: The client, before the foreign exchange forward transaction, shall sign ISDA (International Swaps and Derivatives Agreement) with the bank.

2.Implementation of margin: The credit line or corresponding margin is implemented via the international settlement departments of Bank of China.

3.Inquiry: The applicant determines the details of a forward foreign exchange transaction in written form and makes the corresponding inquiry to Bank of China.

4.Transaction conclusion: When the transaction is concluded, Bank of China will deliver a transaction authentication to the applicant in writing form.

5.Settlement: The actual delivery is conducted on the delivery date. The applicant may, if necessary, request the Bank to close the deal before maturity or conduct a rollover.

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