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Spot Transaction of Foreign Exchange

2021-04-30

Characteristics

•Spot Transaction of Foreign Exchange refers to the foreign exchange transaction settled on the second bank working day after the foreign exchange transaction has been concluded. The settlement day is the value date. The value date will be postponed if it falls out of the bank working day or during the holidays. The rate of Spot Transaction of Foreign Exchange is called Spot Rate.

•The Bank of China can conduct foreign exchange dealings concluded on the same day with interest being calculated or dealings concluded on the same day with the interest being calculated on the next day.

Functions

Spot Transaction of Foreign Exchange is the most essential form in foreign exchange dealings. It has the main three functions as follows:

1.Spot Transaction of Foreign Exchange can meet the needs of the customer to make payment in different currency. Through Spot Transaction of Foreign Exchange, the customer can convert a kind of foreign currency on hand into another foreign currency duly to deal with the foreign exchange settlement in import and export business, tendering and overseas project contracting, or to pay back the foreign exchange loans. For example, a company will return one million USD of loans on Wednesday to a foreign bank and the company has RON, then the company can buy from our Bank USD one million on Monday as the spot rate and sell the RON at the same time. On Wednesday, the company pays RON to our Bank by transfer; while our Bank gives USD to the company. Then the company can remit the USD to pay back the loans.

2.Spot Transaction of Foreign Exchange can help manage the set-up of customer's foreign currencies portfolios.

3.Spot Transaction of Foreign Exchange is an important instrument for foreign exchange speculation. This speculation can give rise to rich profits as well as huge losses.

Procedures for handling such transactions

1.The clients can apply quoted rate or commercial rate to do spot foreign exchange with Bank of china according to the regulations of the bank .

2.The amount may not be less than USD 50,000 of which the clients apply for the single rate during the whole working day. A transaction less than USD 20,000 will be conducted as per the quotations from the Bank of China on the same day. The clients can apply for the commercial rate which amount is over 20,000 before 11:30AM on the working day.

3.Fill out the application form for the transaction of foreign exchange according to requirements, the application form must be signed by the legal representative of an enterprise or by an authorized person with the official seal of the enterprise and then make inquiries about the offer made by the bank for trading.

Points for attention

1.Prices for foreign exchanges trading will be determined by the Bank by reference to prices in the international market. Once the customer accepts the Bank's price, the transaction concludes. The customer may not ask for change or cancellation of the transaction, otherwise the losses or expenses arising thereby will be borne by the customer.

2.When filling out The Application Form of Transaction of Foreign Exchange, the customer should leave in advance the number of the settlement account to the Bank for buying currencies. At the time of settlement of the transaction, the Bank will transfer the currencies bought by the customer into the above-mentioned designated account on the settlement day.

3.The customer can handle spot transactions of foreign exchange with the Bank by means of telephone or giving an order in advance for transactions. When making transactions through telephone, the customer should submit to the Bank the Letter of Attorney for Transaction signed by the legal representative of the enterprise with the official seal affixed thereon, which appoints an authorized person to do spot transactions of foreign exchange with the Bank through telephone. In the meantime, the authorized person must keep in advance the password with the Bank. On the second working day after the conclusion of business through telephone, the customer should also submit to the Bank the Confirmation of Transaction Conclusion. Valid is the telephone recording of the transaction of the Bank if any disputes arise on the transaction concluded.

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