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Foreign Exchange Spot

Introduction

Foreign exchange spot deal refers to the trade where both parties transact at the spot exchange rate of the day on the foreign exchange market, and settle the foreign exchange on the second business day after the trading date (T+2).

Features

1.The customer entrusts the Bank to buy one currency and sell another to make a conversion between different foreign currencies.

2.Direct quotations. No need to use the RMB as an intermediary currency to complete the transaction. It makes quotations closer to the market level and saves transaction cost for clients.

Currencies

USD, EUR, HKD, GBP, RMB and other major currencies.

Target Customers

1.Companies who have the need to buy or sell foreign currencies.

2.Companies who already have a foreign currency account at the bank.

Process

1.Sign the application for Foreign Exchange Trading: The applicant, before the foreign exchange spot transaction, shall submit the Application for Foreign Exchange Trading to the bank

2.Inquiry: The applicant decides on the details of the foreign exchange spot deal in the form of a written request and makes an inquiry to the Bank.

3.Dealing: Once the deal is closed, the Bank sends to the applicant the transaction confirmation in writing.

4.Settlement: The actual delivery is conducted on the delivery date.

Tips

1.In case the value date is not a business day or is a holiday of the Bank, then the value date will be extended accordingly before delivery to the customer.

2.Bank of China can also, at the request of the customer, conclude the foreign exchange transaction with the value date set on the same day of the transaction or on the next day.

Foreign Exchange Swap

Introduction

A foreign exchange swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates.

It has two legs: a spot transaction and a forward transaction. Both legs are executed simultaneously for the same quantity, and therefore offset each other.

Features

Foreign Exchange Swap is a combination of foreign exchange spot and forward. It hedges the interest rate risk and foreign exchange rate risk, and helps clients to match the cash flows in the future for foreign assets or liabilities.

Currencies

USD, EUR, HKD, GBP, RMB and other major currencies.

Target Customers

Clients who have the need to hedge the exchange rate risk for the foreign currencies in/outflows, and already have a foreign currency account at the bank.

Process

1.Clients need to sign an ISDA (International Swaps and Derivatives Agreement) with the bank.

2.Client initiates an order to the bank, with trading details and spot/forward exchange rates. It doesn’t involve any upfront payment at the outset. The client can long or short the currency forward.

3.The client and the bank exchange their currencies with the agreed spot rate. At the maturity, they do the converse exchange at the predetermined forward rate.

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