Flexi FX Forward

Fix an FX rate now, trade in the future

In a flexible FX forward, the client has an obligation to sell one currency and buy another currency at a pre-agreed rate, and the fulfilment of the obligation can be done in parts (utilizations). In the case of a flexible FX forward, the client has an obligation to sell one currency and buy another currency by a certain future date at a pre-agreed rate with the possibility of partial performance for the term of the agreement.

Features of Flexi FX forward

Obligation for full performance to maturity

Possibility for partial executions of the transaction

Protection against adverse market movements

Example: The client enters into a flexible FX forward, with the obligation to sell EUR 1,000,000 and buy USD 1,190,000 by 30.11.2017 (maturity). The client makes 3 disbursements during the period: on 10.09 for EUR 200,000, on 01.10 for EUR 500,000 and on maturity (30.11) for the remaining EUR 300,000. The disbursements are made at the pre-agreed exchange rate for EUR / USD - 1.1900.

Target market of the product

The Flexi FX forward is a financial instrument, which the Bank manufactures and distributes as a product. The table below sets out the criteria for determining for which client profile the product is compatible with or not.

	Positive	Negative
Type of clients	all types of clients: retail, professional and eligible counterparties
Clients’ knowledge and experience	- the movement and the possible expectations regarding the hedged reference values; - lost profits or realized losses related to a negative change in reference values; - hedging cash flows by entering a Flexi FX forward in relation to future receipts or payments on liabilities; - the process of permanent collateral maintenance	does not meet the indicated knowledge and experience requirements
Clients’ financial situation with a focus on the ability to bear losses	ability to bear a negative result due to FX rate change within the term of the instrument and its maturity and/or on the date of partial or full take-up
Clients’ risk tolerance and compatibility of the risk	low-risk profile, due to the ultimate objective to fix the FX rate to the expected receipts/payments	inclined to bear the risks of negative deviations of the reference values
Clients’ objectives and needs	hedging adverse FX rate fluctuations or speculating