Types of Contracts

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Your Choice of Contracts

When dealing with a Foreign Exchange company there are six main types of Foreign Exchange contracts that you can use to execute a currency transaction. If you don’t understand them, or are unsure which is the most suitable, your Personal Account Manager is on hand to explain and help you decide on the best option for you. The contracts are as follows:

Spot Contract

One of our companies importing from Germany needed to buy Euros at the best price possible over a 7 day period. One of our dedicated account managers monitored the market and informed our client that the rate had shifted, 1 ½ % in their favour allowing our clients to secure Euros at one of the highest rates of the week, saving them approximately an additional £750 on their 50,000 euro transfer on top of the usual saving they make on the exchange rate over their bank.

Forward Contract

Our client importing components from China needed to purchase $300,000 to settle an invoice in 90 days. We were able to forward-secure the rate for 90 days, giving the client a piece of mind that their exchange rate was locked in and carried no currency risk. By doing this, the client was able to pay for his currency after 90 days to his supplier, without it affecting his cash flow in the interim.

Time Option

Our client exporting goods to Eastern Europe was unsure of the completion date of manufacture. As they had pre-agreed a price in foreign currency but were unsure of the date they would be able to make delivery, we were able to secure a Time Option on their foreign exchange. This enabled our client the flexibility to deliver their goods and receive payment over a 3 month period, taking receipt of their currency without any penalties or delays.

Limit Order

Our client, (an electronics distributor) had been offered stock that needed to fulfil an order. However, due to the current exchange rate it meant that importing immediately would make him a net loss. We monitored the markets for our client and secured the rate at a higher level, allowing him to import the goods, fulfil his order and make a profit.

Stop loss Order

Our client had an overseas invoice which had to be settled over a 30 day period. As the current rate was higher than their costed level, they were able to set up a stop loss, protecting and guaranteeing their profit margin. They were able to utilise their invoice period to aim for a better exchange rate with protection at all time.

Company Details

Types of Contracts

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