Currency Dealing Guide | Foreign Exchange Help

TheMoveChannel.com | Types of Forward Contract

Three different types of forward contract

  • Time option forward contract
    This is a forward contract that allows access to the funds between two pre-determined dates eg. 01/04/00 - 31/08/00. This is of particular benefit when, for example a car delivery is not precisely known, and therefore funds may be needed earlier. It is important to remember that the last date is not flexible and physical delivery of the currency can take place before but no later than that date.
  • Drawdown forward contract
    This is similar to a time option forward contract, however, if a portion of the funds are required during the life of the contract then they may be drawn down against the said contract at the original buy rate, thereby reducing the final balance. This would particularly suit either a boat or house purchase where large sums maybe needed to settle stage payments. Its structure also lends itself to corporate clients with large capital payments as the minimum is circa. £75,000. Draw down payments will incur a small fee.
  • Fixed term forward contract
    A Fixed-Term Forward Contract gives you the ability to fix a currency rate with a view to take physical delivery of the said currency in the future. The rate is guaranteed irrespective of market fluctuations for the duration of the Contract.

A deposit is required on each Forward Contract and must be received within two (2) working days of the contract date. The balance of the contract must be settled no later than the maturity date. We recommend that our clients settle the outstanding balance on their contracts five (5) working days prior to the contract matures. Should the delivery of the currency not be required upon maturity, the said currency can usually be held on account at no additional charge or penalty.

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