What is a PAR FORWARD?
A par forward is based on the same principles as a standard forward, i.e. a precisely defined amount is hedged by the fixed rate on the given date. It differs from standard forwards in that there is a possibility to make a series of multiple forwards with regular maturities.
The final rate for all forwards in a given par forward series is determined by the average time weighted forward points for each maturity. Such a rate is usually more advantageous for the client than the average rate of standard forwards.
What are the advantages of a PAR FORWARD?
In addition to the standard benefits of future exchange rate security, another benefit is the single exchange rate for all maturities. Therefore, the client does not receive a different forward rate for each maturity, as is the case with a series of standard forwards.
On the contrary, in the case of regular foreign direct debits, the client has the possibility to use one hedging product instead of individual forward trades.
We charge no fees for entering into a par forward.
Terms for concluding a PAR FORWARD:
- Signing of a Framework agreement about payment and investment services.
- You are legally obliged to have LEI number.
- Deposit of cash collateral or getting a Dealing limit.
- The minimum amount of the entire compound trade, i.e. one forward par session, is EUR 200.000 or the equivalent in another currency.
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