Brief Description

An FXO is a derivative contract between a buyer and a seller that gives the buyer of the contract the right, but not the obligation, to buy (call) or to sell (put) a specified amount of one currency against another currency at a specified rate on a specified date. Under this contract, the buyer pays a premium while the seller receives a premium.

Features

Purchasing an FXO enables you to hedge against adverse exchange rate movements, without missing the potential gain if the future currency movement is in your favor.

An FXO offers flexibility as you can choose to buy / sell various currencies at exchange rates (or strike prices) at a time period specified.

However, as a buyer, you are under no obligation to deal at the specified rate. You may opt not to exercise the contract at expiry date and just transact in the spot market if the rate has moved in your favor. All it costs is the premium paid upfront.

Requirements

• Credit Line *
• Client Suitability Assessment Form/ Risk Profile Questionnaire
• Master Agreement
• Suitability Letter
• Risk Disclosure Statement
• Term Sheet
• Other supporting documents as required by the Manual of Regulations for Banks (MORB)*

*Please refer to your Relationship Manager/Account Officer for the rates and other pertinent documents required.

List of Acceptable IDs