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Foreign Exchange Terms
Talk the language with Currency Online

Foreign Exchange uses some pretty unique financial terms. But don’t worry, it’s easy to talk the language with Currency Online. This glossary should cover the most common you’ll find.


B - Balance Date, Beneficiary

Balance Date

The date the client is expected to effect settlement of their sold currency to the specified Currency Online account.

Beneficiary

The receiver of funds a client has purchased. The beneficiary details include account name, bank account details and notification email address.

C - Contract Date

Contract Date

The date and time (NZT) that the contract was transacted.

D - Deposit Date

Deposit Date

The date that the deposit is due to be paid for a deposit on a forward contract.

E - Exchange Rate

Exchange Rate

(Foreign-exchange rate, Forex rate, FX rate) Rate between two currencies specifies how much one currency is worth in terms of the other.

F - Forward Contract, Forward Limit Rate, Forward Rate, Forward Stop Rate, Forward Transaction

Forward Contract

A contract entered into today to buy or sell an agreed currency at an agreed future date and at an agreed price.

Forward Limit Rate

A rate that is better than the current market rate allowing you to capture positive market movements. If the order is executed the contract is for delivery on a future date as specified by the client. A deposit is required upon execution of the order.

Forward Rate

The forward exchange rate refers to an exchange rate that is quoted today but for delivery and payment on a specific future date. In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the spot exchange rate. The forward points represent differential between the interest rates for the currencies.

Forward Stop Rate

A rate that is worse than the current market rate allowing you to protect against adverse market movements. If the order is executed the contract is for delivery on a future date as specified by the client. A deposit is required upon execution of the order.

Forward Transaction

See Forward Contract

 

M - Margin Call, Market Order, Market Rate, Mid-rate

Margin Call

A request for additional deposits to meet margin requirements because of adverse market movements.

Market Order

Market Orders allow customers to specify a rate they wish to transact at that is either better than the current market rate to capture positive movements or worse than the current market rate to protect against adverse movements. Also known as Trade Orders.

Market Rate

The current exchange rate as quoted by Currency Online.

Mid-rate

This is the middle rate between buy/sell quotes in foreign exchange. For example, if the NZD/USD quote was 0.6010/0.6020, the mid-rate would be 0.6015.

 

S - Spot Contract, Spot Limit Rate, Spot OCO, Spot Rate, Spot Stop Rate, Spot Transaction

Spot Contract

It is an agreement to buy or sell one currency in exchange for another at an agreed rate. Settlement for spot usually takes place two business days after the original contract date. However clients in certain cases can contract for same day or next business day.

Spot Limit Rate

A rate that is better than the current market rate allowing you to capture positive market movements. If the order is executed the contract is for immediate delivery.

Spot OCO (One Cancels the Other)

This is both a limit and stop rate. Whichever is reached first automatically cancels the other. If the order is executed the contract is for immediate delivery.

Spot Rate

The spot exchange rate refers to the current exchange rate between two currencies for value in two business days time.

Spot Stop Rate

A rate that is worse than the current market rate allowing you to protect against adverse market movements. If the order is executed the contract is for immediate delivery.

Spot Transaction

See Spot Contract

 

T - T.T. (Telegraphic Transfer), Total Balance, Trade Order

T.T. (Telegraphic Transfer)

An electronic funds transfer to bank accounts worldwide.

Total Balance

The Total Balance for each currency includes:

  • Amounts in this currency bought by you under spot or forward contracts which have reached their contract value date;
  • Less: disbursements paid out in this currency to your Beneficiaries;
  • Less: amounts in this currency sold by you under spot or forward contracts which have reached their contract value date;
  • Plus: receipts in this currency, whether cleared or un-cleared, including for forward contract deposits.

The Total Balance does not include the value of contracts for which the Value Date has not yet been reached. Further details can be seen by following the This Week's Transactions and Account History link from your Account Balances page.

Trade Order

See Market Order

 

V - Value Date

Value Date

The date that the contract will be completed and the beneficiary account credited providing the client has fulfilled their payment obligation under the contract.