Plain FX Forward

Ensure predictability during adverse movements in the FX market

In a plain FX forward, the client has the obligation to sell one currency and buy another currency on a certain future date at a pre-agreed rate.

Features of Plain FX forward

Obligation of the client to deliver the agreed amount in the respective currency at maturity.

Complete protection against adverse market movements.

The client does not have the opportunity to take advantage of favorable market movements

Example: The client execute a plain FX forward, with the obligation to sell EUR 1,000,000 and buy USD 1,190,000 on 30.11.2017 (maturity). At maturity, the transaction is performed at the pre-agreed rate - 1.1900.

Target market of the product

The plain 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 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
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