Reverse repurchase agreements (reverse repos) are transactions in which an institution lends cash in exchange for financial assets sold by the owner of the financial assets at a given price under a commitment by the owner of the financial assets to repurchase the same (or identical) assets at a fixed price on a specified future […]
Options are described in general as Contracts that confer the right, but not obligation to buy (Call Option) or to sell (Put Option) some financial assets at a given price (called Strike/Exercise Price) on or before an specific date. The costs for having this right is called a Premium, which is the price that Buyer […]
21. 3. 2019
Cross-Currency swap (XCS) can be described as combination of FX-swap and IRS, as the counterparties conclude on swapping two currencies at beginning while this is accompanied also with connected interest flows. The only exception for this analogy is that there is switch between interests flows based on market rates (e.g. PRIBOR vs. EURIBOR), and not […]
20. 3. 2019
Interest rate swap (IRS) represents core Derivative deal aimed at hedging against Interest rate risk. It is quite simple arrangement between two Counterparties, about swapping the basis for Interests calculation on any Loan, Corporate Debt, Debt paper or another instrument bearing floating interest rate. Basically there may be following motivations to conclude an IRS deal:a) […]
20. 3. 2019
FX-Forward transaction is an equivalent of FX-Spot conversion, but delayed in time. It means that the FWD conversion rate for a future value date is set now and will be settled at maturity of the deal (in 1 Month, 2 Months, 3 Months etc.). This is quite simple transaction, because there is no 2nd Leg, […]
17. 3. 2019
A simplest conversion of two currencies (e.g. EUR/CZK) based on current FX-rate, without any impact of future market prices. Having said that, it means that Spot deal is concluded and settled on same day value (resp. depending on practical settlement standards for each currency). Actually, FX-spot conversion is not a Derivative but it serves as […]
15. 3. 2019
Derivative transaction, which represents quite simple “two-ways” FX- conversion between two currencies. Two ways means, that one day Citi performs BUY-SELL to Deutsche (1st Leg), while on the other day in future (2nd leg) performs vice-versa, so that it will be SELL-BUY operation for the same nominal amount of hedged short currency. Future value may […]
14. 3. 2019