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  Bank of China >> BOC UK >> Corporate Banking >> Treasury & Foreign Exchange

Foreign Exchange Forward


 

Product Name

Foreign Exchange Forward

Product Description

Foreign exchange forward refers to the bank represents our clients to buy or sell currencies at a future date at a predetermined price. The settlement date of the transaction will be more than 2 trading days. We normally offer FX forward with settlement no more than one year.

Product Features

1. Client requests the bank to buy one currency and selling another currency with the delivery date and pre-determined exchange rate specified in the contract. This contract is intended for clients who want to lock in future exchange rate, avoiding losses due to exchange rate fluctuations.

2. The major currencies are quoted directly, bypassing the second currency (i.e. RMB), reducing the transaction cost for the customers.

3. We can provide foreign exchange trading for most of the currencies in particular expertised in offshore China products.

Eligible Applicants

1. Suitable for corporate customers or individual clients wish to use FX Forward instrument to effectively lock the forward exchange rate.

2. Corporate customers usually need to open a bank account with us before they can trade with our FX trader through their relationship managers.

3. Individual customers usually need to open a bank account and apply at the counter.

Application Requirements

Dependent on currency and the current regime. The FX forward contracts allow clients to hedging future exchange rate risk exposure. Customers who wish to trade FX forward with us must have import and export trade or other similar trade business background.

We can trade with corporate customers or interbank clients in the following ways:

1. By credit line limits: Clients who can fulfil the credit assessment requirement of the bank will be given a respective forward limit to allow trade execution without the margin being paid in advance.

2. By margin deposit: Clients who have placed the required margin with our Bank and signed the necessary agreement will be able to deal forward. However, outstanding forward contracts will be mark-to-market and additional margin may be required if any unrealised loss occurs.

Application Procedures

1. Open accounts: Clients wish to trade FX forward should open a current account with us, in general a margin account should also be opened.

2. Sign agreements: Customers must sign necessary agreements before they can trade FX forward.

3. Pay margin: Clients are required to pay appropriate margin, for corporate customers with credit line allocated limits will be deducted accordingly.

4. Quotation: Customers submit a written authorisation to establish the details of FX forward deals.

5. Deal confirmation: Once the transaction is successful the bank will inform our customers the confirmed transaction in writing.

6. Settlement: Funds will be settled on the delivery date. Customers may also claim early delivery (To square the open exposures with a reverse side transaction) or extend delivery (rollover the contract by execute a deal with the later delivery date).

Gentle Reminder

1. The major currencies that we can provide for FX spot are: Australian Dollar (AUD), Canadian Dollar (CAD), Swiss Franc (CHF), Chinese Renminbi (CNY),  Danish Krone (DKK), Euro (EUR), British Pound (GBP), Hong Kong Dollar (HKD), Hungarian Forint (HUF), Japanese Yen (JPY), Norwegian Krone (NOK), New Zealand Dollar (NZD), Polish Zloty (PLN), Swedish Krona (SEK), U.S. Dollar (USD), Singapore Dollar (SGD), Silver (XAG), Gold (XAU), South African Rand (ZAR), etc.

2. For corporate customers, please contact a relationship manager. For individual customers, please contact the branch.

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