The Federal Reserve System often to referred to as the Federal Reserve or FED is the central bank of the United States.
Forward Exchange Contract
A forward exchange contract is a special type of foreign currency transaction. Forward contracts are agreements between two parties to exchange two designated currencies at a specific time in the future. These contracts always take place on a date after the date that the spot contract settles and are used to protect the buyer from fluctuations in currency prices.
The Federal Open Market Committee. The monetary policy making arm of the Federal Reserve, the committee which sets US interest rates.
Abbreviation of Foreign Exchange - The exchange of one currency for another.
A forward contract is a customized contract between two parties to buy or sell an asset or currency at a specified price on a future date. A forward contract can be used for hedging or speculation, although its non-standardized nature makes it particularly apt for hedging. Unlike standard futures contracts, a forward contract can be customized to any commodity, currency and delivery date. A forward contract settlement can occur on a cash or delivery basis. Forward contracts do not trade on a centralized exchange and are therefore regarded as over-the-counter (OTC) instruments. While their OTC nature makes it easier to customize terms, the lack of a centralized clearing house also gives rise to a higher degree of default risk. As a result, forward contracts are not as easily available to the retail investor as futures contracts.
means funds that are held as a security deposit against a forward transaction & is made up of Initial and Variation margin:
• Initial Margin means a fixed percentage deposit required for the life of the Forward Trade and paid when the trade is instigated.
• Variation Margin means the additional margin required from the Client to cover adverse exchange rate movements relating to existing Forward Trades.
Forward points are the number of basis points added to or subtracted from the current spot rate of a currency pair to determine the forward rate for delivery on a specific value date. When points are added to the spot rate this is called a forward premium; when points are subtracted from the spot rate it is known as a forward discount. The forward rate is based on the difference between the interest rates of the two currencies and the time until the maturity of the deal.
The Financial Conduct Authority is a financial regulatory body in the United Kingdom regulating financial firms providing services to consumers and maintains the integrity of the financial markets.