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

Foreign Exchange Non Deliverable Forwards (NDF)


 

Product Name

Foreign Exchange Non Deliverable Forwards (NDF)

Product Description

The Non Deliverable Forward is a contract for difference of one currency against a value of US $, or other given currency. Transactions are made for future value dates for one currency against, normally US$ at agreed rates. On maturity the currency flow is netted off against the agreed benchmark for fixing. The resultant difference in $ cash flows is either paid to the counterparty, or received from the counterparty.  There is no movement or settlement of the other currency, hence it is effectively a contract for difference. We offer NDF with the settlement of no more than one year.

Product Features

NDF is cash-settled currency forward, the instrument provides an offshore mechanism to hedge currencies against US$. Customers who use this instrument can lock in future exchange rates and hedge from FX market risk.

We offer NDF products in major currencies with expertise in onshore Renminbi (CNY) NDF.

Eligible Applicants

1. Suitable for corporate customers or individual clients who wish to use NDF 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

Application Procedures

1. Open accounts: Clients wish to trade NDF 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 NDF.

3. Pay margin: Clients are required to pay appropriate margin.

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

5. Deal confirmation: Customers will be sent deal confirmation in writing.

6. Settlement: Funds will be settled on the delivery date. (The difference between the contract rate and benchmark fixing rate will be used to calculate real the profit and loss).

Gentle Reminder

1. The major currencies that we can provide for NDF are: Chinese Renminbi (CNY), Euro (EUR), British Pound (GBP), Hong Kong Dollar (HKD), U.S. Dollar (USD).

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

3. Margin is required from all clients wish to trade NDF.

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