Interest Rate Cap

Positive

Negative

Type of clients

each client with a credit a credit exposure of at least 3 years

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 for the client when in Interest Rate Collar transaction and Reverse Interest Rate Collar transaction;

- hedging the cash flows by buying Interest Rate Cap, Interest Rate Floor or Interest Rate Collar transaction and Reverse Interest Rate Collar, combined with Interest Rate Swap related to the interest payments of the client on a credit exposure;

- maintenance of collateral required when concluding an Interest Rate Collar transaction;

- cost management and limited protection in the cap spread rate and the floor spread rate strategies

does not meet the indicated knowledge and experience requirements

Clients’ financial situation with a focus on the ability to bear losses

- to suffer a negative result from the periodic netting payments on Interest Rate Collar transaction within the maturity of the instrument;

- the existence of a credit exposure hedged with an Interest Rate Cap, Interest Rate Floor or Interest Rate Collar and Reverse Interest Rate Collar, combined with Interest Rate Swap;

- ability to pay a premium in advance for the option or the option strategy

Clients’ risk tolerance and compatibility of the risk

if the objective is hedging, the client's risk appetite will not be considered

inclined to bear the risks of negative deviations of the reference values in the presence of a long-term loan or if they do not have a credit exposure

Clients’ objectives and needs

to hedge an exposure