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?
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.
Date of accepted payment
Spot exchange rate EUR/CZK
Par forward agreed exchange rate
Standard forward rate
Accepted payment in EUR
Any drawdown during the par forward term is for the originally negotiated forward rate and at no additional cost.
- Blocking of client funds
- Dealing limitem against financial reports
- Dealing limitem secured with a bill of exchange
- Dealing limitem secured with a property
If you are interested in this product and believe that you would use it as a convenient tool to reduce the risk associated with your business, please contact us.