DOCSLIB.ORG

Module - 9 Foreign Exchange Contracts: Spot and Forward Contracts

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text

Load more

NPTEL International Finance Vinod Gupta School of Management, IIT.Kharagpur. Module - 9 Foreign Exchange Contracts: Spot and Forward Contracts Developed by: Dr. Prabina Rajib Associate Professor (Finance & Accounts) Vinod Gupta School of Management IIT Kharagpur, 721 302 Email: [email protected] Joint Initiative IITs and IISc – Funded by MHRD - 1 - NPTEL International Finance Vinod Gupta School of Management, IIT.Kharagpur. Lesson - 9 Foreign Exchange Contracts: Spot and Forward Contracts Highlight & Motivation: Forex market players can trade foreign exchange in differing maturities and using different types of instruments i.e, cash, tom, spot, forward, futures, swaps and options market. In this session, different aspects spot, forward and futures contracts are discussed. The difference between forward contract and futures contracts is also part of this session. Different dimensions of contract specification of futures contract traded at National stock exchange have also been elaborated. Hence the objective of this module is to understand: • Cash, Tom, Spot trading o Trade date, settlement date o Spot trading rollover mechanism. • Foreign Exchange Forward contracts o Fixed maturity contract o Partially optional contract o Fully optional contract o Non-delivery forward contracts. • Foreign Exchange Futures Contract o Different dimensions of foreign exchange future contract specification trading at National Stock Exchange of India. Joint Initiative IITs and IISc – Funded by MHRD - 2 - NPTEL International Finance Vinod Gupta School of Management, IIT.Kharagpur. 9.1: Introduction: Forex rates can be quoted as spot or, forward contracts. When buyers and sellers agree to trade at the current exchange rate for immediate delivery, it is known as spot transaction or cash transaction. The word “immediate” has different meaning in this case. It can “ at that instance” can go upto maximum of two days. In forex market parlance, the trade date is the day on which both parties agree to buy and sell. The settlement date/value date is the day on which funds are actually transferred between the buyer and seller. On settlement/value date, the buying or selling actions will be realized by settlement of payment and receipt. Depending upon the gap between trade and value date, spot forex trading can either be categorized as cash, tom or spot transaction. In the next section, Section 9.2 the spot transactions details are elaborated. 9.2: Spot forex transactions: When a person goes to money changer/bank and buys one currency by paying another currency is an example of spot transaction (or spot delivery) and the rate quoted by the money changer/bank is the spot rate. For example, in India, some hotels buy or sell foreign currency over the counter. Normally the hotel/antique shops will have a display board mentioning different INR rates for different currency. Any guest visiting the hotel can buy or sell foreign currency at the rate displayed on the board. This is an example of cash transaction where the trade date and settlement date coincide. Similarly in the interbank market, banks & financial institutions buy and sell currencies at a rate prevailed on the trade date. However, the actual settlement for the agreed amount may take place on T+1 or latest by T+2 days. With the advance in communication technology and electronic fund transfer mechanism, settlement date is narrowing down to trade date. In India, the delivery under a spot transaction can be settled as ready/cash, Tom or Spot as given in Table 9.1. Joint Initiative IITs and IISc – Funded by MHRD - 3 - NPTEL International Finance Vinod Gupta School of Management, IIT.Kharagpur. Table 9.1: Different types of delivery/settlement under spot transaction. Ready or cash The transaction to be settled on the same day Tom The delivery of foreign exchange to be made on the day next (tomorrow) to the date of transaction. Spot Delivery of foreign exchange would take place on the 2nd working day from the trade date. 9.3: Roll over of Spot/Tom contract: Many-a-times, settlement for spot/tom transactions may not happen on the T+1 or T+2, but gets rolled over. In a typical spot/tom transaction, actual delivery of one currency and receipt of other currency happens between two parties. However, most forex traders are speculators. They do not trade with the intention of delivering (the currency they have sold) or receiving currency (the currency they have bought), but wants to make profit from speculation. Hence, forex brokers allow these speculators to rollover the contracts. Rollover delays the actual settlement of the trade and it goes on until the trader closes its position. For deferring the settlement, forex brokers pay or receive interest from the trader. A trader receives interest on the currency that has been bought and pays interest for the currency that has been sold. Interest is calculated every day i.e, even for weekends. Depending on the prevailing interest rate in the respective currencies, net interest is either added or subtracted from traders account. This goes on until the trader squares up his open position. By providing rollover facilities, forex brokers also earn significant brokerage fee. For example, on Day 1, a trader has entered into a spot transaction to sell USD 1000 to a forex broker and receive INR 47680. In other words, the trader sells USD and buys INR. On the settlement day, (on Day 3), the trader should deliver USD 1000 and take INR 47680. However, both the trader and the broker agree not to settle but defer the settlement by another two days. Hence, on Day 5, the trader pays USD 1000 and receives INR 47680. By deferring the settlement, it can be understood that the trader has given a loan of INR 47680 to the broker. Simultaneously, the broker has given a loan of USD 1000 to the trader. Hence both owe each other interest for 2-days. Joint Initiative IITs and IISc – Funded by MHRD - 4 - NPTEL International Finance Vinod Gupta School of Management, IIT.Kharagpur. Hence, the trader pays interest rate on USD 1000 for two days. Similarly, the broker pays interest rate on INR 47680 for two days. The interest payment and receipt is netted off. After two days, either the trader or the broker pays interest rate differential. For providing this roll over facilities, the brokers charge different types of margins. Forex brokers and traders enter into an agreement that forms the basis for the rollover facility provided by brokers. The Box 9.1 highlights the policy statements regarding rollover and interest rate for rollover spot transaction of iFinixforex brokers. Box 9.1: Rollover & Interest Policy for spot forex trades. Source: http://www.ifinixforex.com/2policy_rollover_interest.html iFinix Forex policy statements provide our clients with the utmost in transparency and client service in order to maximize their Forex trading experience. Rollover & Interest Policy In the spot forex market trades settle in two business days. If a trader sells 10,000 Euros on Tuesday, the seller must deliver 10,000 Euros on Thursday unless the position is held open and "rolled" over to the next value date. As a service to our traders, iFinix Forex automatically rolls over all open positions to the next settlement date at 17:00 Eastern Time. Rollover or "cost-of-carry" involves the applying of a daily debit or credit to a trading account based on positions held open at 17:00 Eastern Time and on the interest differential between the two currencies in the pair(s) being traded. In the majority of cases, if a trader is "short" the currency bearing the higher interest rate then their account will be debited, if they are long then their account will be credited. For example, a short USD/JPY position will incur an interest charge as one is effectively "short" US Dollars and "long" Japanese Yen. Dollar short-term interest rates are currently at 3.5% while Yen rates are around 0.5%, a negative 3% difference. This interest differential forms the basis of the daily premium debit/credit which is applied to all open trades at 17:00 Eastern Time, Monday through Friday each week. Let us go back to our example of forex trader and forex broker. The trader has given a loan of INR 47680 and taken a loan of USD 1000. Suppose interest per annum in INR is 8% while that of USD is 4%. The trader should receive INR interest for two days and pay USD interest for 2 days. Hence the trader’s receipt would be (INR 20.9) and payment Joint Initiative IITs and IISc – Funded by MHRD - 5 - NPTEL International Finance Vinod Gupta School of Management, IIT.Kharagpur. would be (USD 0.2191). Suppose the INR/US$ rate is INR 47.75 on day 2. Trader’s payment in INR terms is INR 10.465. With netting off the trader receives INR10.435. Forex rates can be quoted as spot or, forward contracts. When buyers and sellers agree to trade at the current exchange rate for immediate delivery, it is known as spot transaction or cash transaction. The word “immediate” has different meaning in this case. It can “ at that instance” can go upto maximum of two days. In forex market parlance, the trade date is the day on which both parties agree to buy and sell. The settlement date is the day on which funds are actually transferred between the buyer and seller. 9.4: Forward forex transactions In a forward contract both parties enter into a contract on a given day and lock in a fixed rate on specific future date. In such types of contract, the terms of the purchase (buy or sell) are agreed up front (trade execution date) but actual exchange take place on a date in the future (maturity date).
Recommended publications
  • Asian Journal of Comparative Law

    Asian Journal of Comparative Law

    Asian Journal of Comparative Law Volume 5, Issue 1 2010 Article 8 Financial Regulation in Hong Kong: Time for a Change Douglas W. Arner, University of Hong Kong Berry F.C. Hsu, University of Hong Kong Antonio M. Da Roza, University of Hong Kong Recommended Citation: Douglas W. Arner, Berry F.C. Hsu, and Antonio M. Da Roza (2010) "Financial Regulation in Hong Kong: Time for a Change," Asian Journal of Comparative Law: Vol. 5 : Iss. 1, Article 8. Available at: http://www.bepress.com/asjcl/vol5/iss1/art8 DOI: 10.2202/1932-0205.1238 ©2010 Berkeley Electronic Press. All rights reserved. Financial Regulation in Hong Kong: Time for a Change Douglas W. Arner, Berry F.C. Hsu, and Antonio M. Da Roza Abstract The global financial system experienced its first systemic crisis since the 1930s in autumn 2008, with the failure of major financial institutions in the United States and Europe and the seizure of global credit markets. Although Hong Kong was not at the epicentre of this crisis, it was nonetheless affected. Following an overview of Hong Kong's existing financial regulatory framework, the article discusses the global financial crisis and its impact in Hong Kong, as well as regulatory responses to date. From this basis, the article discusses recommendations for reforms in Hong Kong to address weaknesses highlighted by the crisis, focusing on issues relating to Lehman Brothers "Minibonds." The article concludes by looking forward, recommending that the crisis be taken not only as the catalyst to resolve existing weaknesses but also to strengthen and enhance Hong Kong's role and competitiveness as China's premier international financial centre.
  • Product Disclosure Statement

    Product Disclosure Statement

    Product Disclosure Statement United States & Canada (January 2014) Global Payment and Risk Management Solutions Product Disclosure Statement - United States & Canada January 2014 Contents Introduction . 3 Products . 3 Trade Confirmations . 8 Telephone Recordings . 8 Complaints . 8 Privacy Statement . 14 Fraud Protection . 15 Compliance . 16 Taxation . 17 Contact Us . 18 Glossary . 19 Page 2 of 20 Product Disclosure Statement - United States & Canada January 2014 Introduction This Product Disclosure Statement (PDS) contains About AFEX information about the Global Payment and Risk Associated Foreign Exchange, Inc . (AFEX), a California Management Solutions provided to you by AFEX . Corporation located at Warner Center, 21045 Califa Street, Woodland Hills, California 91367 United States, is The information set out in this PDS is general in nature licensed and regulated as a Money Transmitter by several and has been prepared without taking into account your State Regulatory Agencies, and it is registered as a Money objectives, financial situation or needs . Before dealing Services Business (MSB) with the Financial Crimes in foreign exchange transactions you should consider Enforcement Network (FinCEN), a bureau of the United whether it is appropriate, having regard to your own States Department of the Treasury Financial . In addition, objectives, financial situation and needs . This PDS does AFEX is also registered with the Financial Transactions and not constitute financial or legal advice, including financial Reports Analysis Centre of Canada (FINTRAC) . recommendations . If you need legal advice, please seek the services of an Established in 1979, AFEX effectively pioneered the attorney . business of personalized foreign exchange services, tailored to small and mid-size business clients . AFEX is If you have any questions or need more information, please wholly owned by Associated Foreign Exchange Holdings, contact your AFEX Account Executive or visit our website at Inc .
  • Interest Rate Swaps

    Interest Rate Swaps

    Interest Rate Swaps • An interest rate swap is a contract between two counterparties who agree to exchange the future interest rate payments they make on loans or bonds. These two counterparties are banks, businesses, hedge funds, or investors. • The most common is the so-called vanilla swap. It's when a counterparty swaps floating-rate payments with the other party's fixed-rate payments. • The floating-rate payment is tied to the Libor, which is the interest rate banks charge each other for short-term loans. • The counterparty that wants to swap its floating-rate payments and receive fixed-rate payments is called a receiver or seller. The counterparty that wants to swap its fixed-rate payments is the payer. • The counterparties make payments on loans or bonds of the same size. This is called the notional principle. • In a swap, they only exchange interest payments, not the bond itself. • A smaller number of swaps are between two counter parties with floating- rate payments. • Also, the present value of the two payment streams must also be the same. That means that over the length of the bond, each counterparty will pay the same amount. It’s easy to calculate the NPV for the fixed-rate bond because the payment is always the same. It's more difficult to predict with the floating rate bond. The payment stream is based on Libor, which can change. Based on what they know today, both parties have to agree then on what they think will probably happen with interest rates. • A typical swap contract lasts for one to 15 years.
  • Foreign Exchange Markets and Exchange Rates

    Foreign Exchange Markets and Exchange Rates

    Salvatore c14.tex V2 - 10/18/2012 1:15 P.M. Page 423 Foreign Exchange Markets chapter and Exchange Rates LEARNING GOALS: After reading this chapter, you should be able to: • Understand the meaning and functions of the foreign exchange market • Know what the spot, forward, cross, and effective exchange rates are • Understand the meaning of foreign exchange risks, hedging, speculation, and interest arbitrage 14.1 Introduction The foreign exchange market is the market in which individuals, firms, and banks buy and sell foreign currencies or foreign exchange. The foreign exchange market for any currency—say, the U.S. dollar—is comprised of all the locations (such as London, Paris, Zurich, Frankfurt, Singapore, Hong Kong, Tokyo, and New York) where dollars are bought and sold for other currencies. These different monetary centers are connected electronically and are in constant contact with one another, thus forming a single international foreign exchange market. Section 14.2 examines the functions of foreign exchange markets. Section 14.3 defines foreign exchange rates and arbitrage, and examines the relationship between the exchange rate and the nation’s balance of payments. Section 14.4 defines spot and forward rates and discusses foreign exchange swaps, futures, and options. Section 14.5 then deals with foreign exchange risks, hedging, and spec- ulation. Section 14.6 examines uncovered and covered interest arbitrage, as well as the efficiency of the foreign exchange market. Finally, Section 14.7 deals with the Eurocurrency, Eurobond, and Euronote markets. In the appendix, we derive the formula for the precise calculation of the covered interest arbitrage margin.
  • Foreign Exchange Training Manual

    Foreign Exchange Training Manual

    CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS SOURCE: LEHMAN LIVE LEHMAN BROTHERS FOREIGN EXCHANGE TRAINING MANUAL Confidential Treatment Requested By Lehman Brothers Holdings, Inc. LBEX-LL 3356480 CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS SOURCE: LEHMAN LIVE TABLE OF CONTENTS CONTENTS ....................................................................................................................................... PAGE FOREIGN EXCHANGE SPOT: INTRODUCTION ...................................................................... 1 FXSPOT: AN INTRODUCTION TO FOREIGN EXCHANGE SPOT TRANSACTIONS ........... 2 INTRODUCTION ...................................................................................................................... 2 WJ-IAT IS AN OUTRIGHT? ..................................................................................................... 3 VALUE DATES ........................................................................................................................... 4 CREDIT AND SETTLEMENT RISKS .................................................................................. 6 EXCHANGE RATE QUOTATION TERMS ...................................................................... 7 RECIPROCAL QUOTATION TERMS (RATES) ............................................................. 10 EXCHANGE RATE MOVEMENTS ................................................................................... 11 SHORTCUT ...............................................................................................................................
  • FR 2052A Complex Institution Liquidity Monitoring Report OMB Number 7100-0361 Approval Expires March 31, 2022

    FR 2052A Complex Institution Liquidity Monitoring Report OMB Number 7100-0361 Approval Expires March 31, 2022

    FR 2052a Complex Institution Liquidity Monitoring Report OMB Number 7100-0361 Approval expires March 31, 2022 Public reporting burden for this information collection is estimated to average 120 hours per response for monthly filers and 220 hours per response for daily filers, including time to gather and maintain data in the required form and to review instructions and complete the information collection. Comments regarding this burden estimate or any other aspect of this information collection, including suggestions for reducing the burden, may be sent to Secretary, Board of Governors of the Federal Reserve System, 20th and C Streets, NW, Washington, DC 20551, and to the Office of Management and Budget, Paperwork Reduction Project (7100-0361), Washington, DC 20503. FR 2052a Instructions GENERAL INSTRUCTIONS Purpose The FR 2052a report collects data elements that will enable the Federal Reserve to assess the liquidity profile of reporting firms. FR 2052a data will be shared with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation to monitor compliance with the LCR Rule. Confidentiality The data collected on the FR 2052a report receives confidential treatment. Information for which confidential treatment is provided may subsequently be released in accordance with the terms of 12 CFR 261.16 or as otherwise provided by law. Information that has been shared with the OCC or the FDIC may be released in accordance with the terms of 12 CFR 260.20(g). LCR Rule For purposes of these instructions, the LCR Rule means 12 CFR part 50 for national banks and Federal savings associations, Regulation WW or 12 CFR part 249 for Board‐regulated institutions, and 12 CFR part 329 for the FDIC‐supervised institutions.
  • The Empirical Robustness of FX Smile Construction Procedures

    The Empirical Robustness of FX Smile Construction Procedures

    Centre for Practiicall Quantiitatiive Fiinance CPQF Working Paper Series No. 20 FX Volatility Smile Construction Dimitri Reiswich and Uwe Wystup April 2010 Authors: Dimitri Reiswich Uwe Wystup PhD Student CPQF Professor of Quantitative Finance Frankfurt School of Finance & Management Frankfurt School of Finance & Management Frankfurt/Main Frankfurt/Main [email protected] [email protected] Publisher: Frankfurt School of Finance & Management Phone: +49 (0) 69 154 008-0 Fax: +49 (0) 69 154 008-728 Sonnemannstr. 9-11 D-60314 Frankfurt/M. Germany FX Volatility Smile Construction Dimitri Reiswich, Uwe Wystup Version 1: September, 8th 2009 Version 2: March, 20th 2010 Abstract The foreign exchange options market is one of the largest and most liquid OTC derivative markets in the world. Surprisingly, very little is known in the aca- demic literature about the construction of the most important object in this market: The implied volatility smile. The smile construction procedure and the volatility quoting mechanisms are FX specific and differ significantly from other markets. We give a detailed overview of these quoting mechanisms and introduce the resulting smile construction problem. Furthermore, we provide a new formula which can be used for an efficient and robust FX smile construction. Keywords: FX Quotations, FX Smile Construction, Risk Reversal, Butterfly, Stran- gle, Delta Conventions, Malz Formula Dimitri Reiswich Frankfurt School of Finance & Management, Centre for Practical Quantitative Finance, e-mail: [email protected] Uwe Wystup Frankfurt School of Finance & Management, Centre for Practical Quantitative Finance, e-mail: [email protected] 1 2 Dimitri Reiswich, Uwe Wystup 1 Delta– and ATM–Conventions in FX-Markets 1.1 Introduction It is common market practice to summarize the information of the vanilla options market in the volatility smile table which includes Black-Scholes implied volatili- ties for different maturities and moneyness levels.
  • Derivatives User Guide Oracle Banking Treasury Management

    Derivatives User Guide Oracle Banking Treasury Management

    Derivatives User Guide Oracle Banking Treasury Management Release 14.5.0.0.0 Part No. F43223-01 May 2021 Copyright Copyright: 2007, 2021 Copyright Holder: Oracle Product Name: Oracle Financial Software Services, Oracle park, off western express highway, Goregaun (east) mumbai, Maharashtra 400 063, India, Phone Number - 91-22 6718 3000, 91-22 6718 3001. www.oracle.com/finan- cial services Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners. U.S. GOVERNMENT END USERS: Oracle programs, including any operating system, integrated software, any programs installed on the hardware, and/or documentation, delivered to U.S. Government end users are “commer- cial computer software” pursuant to the applicable Federal Acquisition Regulation and agency-specific supplemental regulations. As such, use, duplication, disclosure, modification, and adaptation of the programs, including any oper- ating system, integrated software, any programs installed on the hardware, and/or documentation, shall be subject to license terms and license restrictions applicable to the programs. No other rights are granted to the U.S. Govern- ment. This software or hardware is developed for general use in a variety of information management applications. It is not developed or intended for use in any inherently dangerous applications, including applications that may create a risk of personal injury. If you use this software or hardware in dangerous applications, then you shall be respon- sible to take all appropriate failsafe, backup, redundancy, and other measures to ensure its safe use. Oracle Corpo- ration and its affiliates disclaim any liability for any damages caused by use of this software or hardware in dangerous applications.
  • FX Option Tutorial | Finpricing

    FX Option Tutorial | Finpricing

    Currency Option or FX Option Introduction and Pricing Guide FinPricing Currency Option A currency option or FX option is a contract that gives the buyer the right, but not the obligation, to buy or sell a certain currency at a specified exchange rate on or before a specified date. Currency options are one of the most common ways for corporations, individuals or financial institutions to hedge against adverse movements in exchange rates. Currency options are one of the most common ways for corporations, individuals or financial institutions to hedge against adverse movements in exchange rates. Corporations primarily use FX options to hedge uncertain future cash flows in a foreign currency. The general rule is to hedge certain foreign currency cash flows with forwards, and uncertain foreign cash flows with options. Currency Option Summary ▪ Currency Option or FX Option Introduction ▪ The Use of Currency Option ▪ Forex Market Convention ▪ Currency Option Payoffs ▪ Valuation ▪ Practical Guide ▪ A Real World Example Currency Option Currency Option or FX Option Introduction • A currency option is a derivative contract that grants the buyer the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified future date. • The FX options market is the deepest, largest and most liquid market for options of any kind. • Most trading is over the counter (OTC) and is lightly regulated. • There are call options and put options. Also a currency option could be European style or American style. • Call options provide the holder the right but not the obligation to purchase an underlying currency at a specified FX rate on a future date.
  • Referred Language, You May Request for the Chinese Version of This Important Facts from Our Sales Staff

    Referred Language, You May Request for the Chinese Version of This Important Facts from Our Sales Staff

    中國建設銀行(亞洲)股份有限公司 China Construction Bank (Asia) Corporation Limited Important Facts Foreign Exchange Option (FX Option) September 21, 2015 This is a derivatives product which is NOT protected by the Deposit Protection Scheme in Hong Kong. This product is NOT principal protected. The contents of this Important Facts have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution before investing in this product. This Important Facts is a part of the offering documents for this product. You should not invest in this product based on this Important Facts alone. If you are in any doubt, you should obtain independent professional advice. If English is not your preferred language, you may request for the Chinese version of this Important Facts from our sales staff. 倘若英文並非閣下屬意的語言，閣下可向本行的銷售人員索取本重要資料的中文版本。 This is a derivatives product. The investment decision is yours but you should not invest in this product unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives. Quick facts Bank: China Construction Bank (Asia) Corporation Limited, Hong Kong Product Type: Foreign Exchange Option Minimum Transaction Amount: USD 250,000 or equivalent in other Contract Currencies Tenor: Up to 1 year Contract Currency: AUD, CAD, CHF, EUR, GBP, JPY, NZD, CNH or USD [ or any other currency determined by the Bank from time to time ] Premium: The amount of premium payable by the Option Buyer to the Option Seller as consideration for granting an Option. Expiration Time: Tokyo 15:00 or New York 10:00 or Hong Kong 11:15 Page 1 of 12 中國建設銀行(亞洲)股份有限公司 China Construction Bank (Asia) Corporation Limited Call Option: A Call Option Buyer has the right to buy the underlying currency at a pre- defined foreign exchange rate (the Strike Price) Put Option: A Put Option Buyer has the right to sell the underlying currency at the Strike Price.
  • The Pricing of Over-The-Counter Options

    The Pricing of Over-The-Counter Options

    The pricing of over-the-counter options By Shelley Cooper and Stephanie Weston of the Bank’s Banking Supervisory Policy Division. Earlier this year, the Bank carried out a survey of firms involved in trading over-the-counter options to investigate how they price and manage the risk associated with the instruments, and to assess the extent of differences in their approaches. This article explains the background to that survey, and outlines its main results. Over-the-counter (OTC) derivatives—and OTC options in Option products and the OTC market particular—are part of a growing financial market, and one Derivative instruments are contracts whose value is derived which raises particular challenges for participating from the value of some underlying asset. The underlying institutions and their supervisors. Assessment and asset may be a debt instrument, bond, share, share index, management of the risks incurred in trading these products exchange rate, futures contract or commodity price. An are not straightforward.(1) Accordingly, earlier this year the option is a derivative contract that gives the purchaser the Bank undertook a survey to investigate how different right, but not the obligation, to buy or sell an underlying institutions priced options and related instruments in the asset at a certain price (the exercise or strike price) on or OTC market. It circulated a list of equity, foreign exchange before an agreed date. For this right, the purchaser pays a and interest rate option and swap instruments to banks active premium to the seller. The seller (or writer) of an option has in derivative markets and to several leading securities firms.
  • 招商銀行股份有限公司 China Merchants Bank Co., Ltd

    招商銀行股份有限公司 China Merchants Bank Co., Ltd

    Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. 招 商 銀 行 股 份 有 限 公 司 CHINA MERCHANTS BANK CO., LTD. (A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock code: 03968) 2009 ANNUAL RESULTS ANNOUNCEMENT The Board of Directors (the “Board”) of China Merchants Bank Co., Ltd. (the “Company”) is pleased to announce the audited results of the Company and its subsidiaries for the period ended 31 December 2009. This announcement, containing the full text of the 2009 Annual Report of the Company, complies with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited in relation to information to accompany preliminary announcements of annual results. Printed version of the Company’s 2009 Annual Report will be delivered to the H-Share Holders of the Company and available for viewing on the websites of The Stock Exchange of Hong Kong Limited (www.hkex.com.hk) and of the Company (www.cmbchina.com) in late April 2010. Publication of Results Announcement Both the Chinese and English versions of this results announcement are available on the websites of the Company (www.cmbchina.com) and The Stock Exchange of Hong Kong Limited (www.hkex.com.hk).