The total amount of risk faced by the bank and its customers in spot and forward contracts.
During the validity period, an option that can be exercised on any working day.
When prices rise in response to market demand, a currency is called appreciation, and the value of assets increases.
Using hedging prices in different markets, by buying or selling credit instruments, while buying positions of the same amount but in the opposite direction in the corresponding market, in order to profit from the slight price difference.
Used in forward "premium/discount" quotations.
The selling price of a specified currency in a foreign exchange transaction contract or a cross currency transaction contract. At this price, traders can buy the base currency. In a quote, it is usually the right price of the quote. Example: USD/CHF 1.4527/32, the selling price is 1.4532, which means that you can buy 1 US dollar at 1.4532 Swiss francs.
In foreign exchange transactions, assets refer to the right to receive monetary amounts corresponding to balance sheet claims (such as loans) or corresponding to forward or spot transactions that are not completed within a specified period of time from counterparties.
The instructions tell the trader the best buy/sell price.
At or Better
The transaction is executed at a specific or better exchange rate.
An option whose performance/strike price is equal to or close to the current market price of the underlying financial instrument.
At Par Forward Spread
When the forward exchange rate is equal to the spot exchange rate.
At the Price Stop-Loss Order
Regardless of market conditions, a self-set price stop loss order that must be executed at the requested price.
Sell an item to the highest bidder.
(1) Foreign exchange distribution methods commonly used in foreign exchange management systems.
(2) The method used in allocating government bonds, such as U.S. Treasury bills. Small investors were granted preferential access to Treasury bills. Then, the average issuance price is calculated on the basis of the accepted competitive bidding. In some cases, government auctions use markups instead of prices for bidding.
Average Rate Option
The execution price is based on the contract during the contract period and the average short-term exchange rate. Sometimes referred to as "Asian Options".
Clearing and related procedures.
Back to Back
(1) In a transaction, the obligations and debts of one transaction are reflected in the second transaction.
(2) In a transaction, a loan obtained in one currency in one country corresponds to a loan obtained in another currency in another country.
Balance of Payments
A record of the economic activity system of a country during a specified period.
(1) This term usually has any of the following meanings: (i) "current account" balance of payments; or (ii) current account plus specific long-term capital flows.
(2) The combination of trade revenue and expenditure, current revenue and expenditure, capital account and off-book revenue and expenditure constitutes a total balance of payments.
Long-term balance of payments deficits often lead to restrictions on capital transfers and/or a decline in currency value.
Balance of Trade
The value of export trade minus the value of import trade. Generally, it does not include off-book income and expenditure, otherwise it is called commodity trade or physical trade. The numbers can be derived from FoB/Fas, after customs clearance or Fob exports.
The range within which a currency is allowed to float. A system used in the exchange rate mechanism (ERM).
The line of credit granted by a bank to a customer is also called a "line of credit."
Paper money is a paper money issued by a central bank or issuing bank and is legal tender, but it is generally not considered part of the foreign exchange market. But paper money can be converted into the foreign exchange market in some countries. Paper currency is generally priced at the current spot exchange rate of a currency in the form of royalties.
The interest rate at which the central bank borrows from its domestic banking system.
A type of approach-dependent option whose payment mode and loan period not only depend on the final price of the underlying currency, but also on whether the underlying currency will break the predetermined price (boundary) during the validity period of the option.
The currency used by the bank or institution to report the results of its operations. Also called the reporting currency.
A term used in the UK to refer to the interest rate used by banks when calculating the interest rate of borrowers. Highly creditworthy borrowers pay only a small amount of interest rates over Jihuai.
One hundredth of a percentage point. (0.0001)
A price expressed in terms of a rate of return to maturity or an annual rate of return.
The process in which the basis tends to zero as the contract is about to expire.
In the spot exchange and options market, it takes an opposing position in order to profit from the favorable fluctuation of the basis.
The difference between the spot exchange price and the option price.
A group of currencies usually used to manage the exchange rate of a currency. Sometimes it is also used as the currency unit of the current account.
People who believe that prices will fall.
A market (as opposed to a bull market) when prices are falling rapidly under generally bad conditions.
The price is the price at which the market can buy a currency in a foreign exchange transaction contract or a cross-currency transaction contract. At this price, traders can sell the base currency. It is the left part of the quotation, for example: USD/CHF 1.4527/32, the purchase price is 1.4527; it means that you can sell 1 US dollar and buy 1.4527 Swiss francs.
Usually refers to the first three digits of an exchange rate, the number that traders generally know in the quotation. For example, the USD/Mark price "30/40" indicates that the price is 1.5530/40. In this example, the "large number" is 1.55, which is generally defaulted by both parties (because it rarely changes in a trading day). Therefore, traders only quote the last 2 digits of the sell/buy quotes.
Bank for International Settlements.
A system used when foreign exchange is limited. Generally payment is made through the central bank, and sometimes it is required to balance the international trade balance every year.
A digital "subscription" (or "incremental") is like standard European subscription rights. However, if the subscription of banknotes expires, the due payment is fixed to one unit of the relative currency.
An option pricing formula, originally exported by Fisher Black and Myron Scholes for securities options, and later improved by Black and used for futures options. It is widely used in the currency market.
Records of transactions concluded abroad.
The colloquial saying of "transaction" in Russian.
Break Even Point
The price of the financial instrument used by the option buyer to purchase the premium, which means that he has neither loss nor profit. For a subscription right, the break-even point is the execution price plus the premium.
Cancel an exchange or make a reversal in the options market to return to the original position of the option buyer.
The location of the meeting held in 1944, which led to the establishment of the post-war foreign exchange system, which remained in use until the 1970s. Another outcome of this meeting was the establishment of the IMF (International Monetary Fund). This system establishes that the ratio of the currency in the fixed exchange rate system to gold or the U.S. dollar fluctuates within 1% of the currency.
The agent, for the purpose of collecting commissions or obtaining the bid-ask spread, executes the customer's instructions to buy and sell currencies and related financial instruments. A broker is an agent who collects commissions, not an agent of the principal or own account.
In the foreign exchange market, brokers tend to play the role of an intermediary between banks, bringing buyers and sellers together and collecting commissions paid by the initiator or both parties. There are now 4 or 5 major brokers around the world conducting business through affiliates, associates and partners in many countries.
The commission charged by the broker.
Bundesbank, the Central Bank of Germany.
People who believe that prices will rise.
A market characterized by rising prices.
Sterling bonds issued by foreign financial institutions in the UK.
The German Central Bank.
(1) Option butterfly arbitrage is a type of arbitrage transaction where multiple option months are traded at one spread at the same time. The transaction basically consists of 2 option arbitrage transactions of 3 or 4 different option months with the same spread.
(2) Option butterfly arbitrage is a combination of bear market arbitrage and bull market arbitrage, in which multiple option months and strike prices are traded at the same time with a spread. The transaction basically consists of 2 option arbitrage transactions with the same spread for 3 or 4 different option months, and the exercise with one spread.