FX Part 2 – FX Derivatives

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FX 102: FX Derivatives

1. Outright Forwards Part 1

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  • 1
    Instruments in the context of financial markets, instruments refer to financial instruments that is to say, we classify deals or contracts between market participants according to the name used for such instruments in the market. In general, these references or names by market convention oftentimes refer to the goal of what that instrument aims to achieve or describes what it does. In this way, it highlights its connection with a general definition of the word instrument: tool.
  • 2
    Historically this was always T+2 days to allow for cross border settlement, North American markets are furiously moving towards T+1
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    Over-the-counter
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    (or forward, if you want to be a stickler about the difference between futures and forwards. The point here is that it is a date in the future and not the spot)
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    terminal is used in this description as there may be intermediary cash flows along the way that cancel out and, as long as those cancel out, we don’t have to consider them in the final outcome