Par forward

A par forward is based on the same principles as a standard forward, i.e. a precisely defined amount is hedged by the fixed rate on the given date. It differs from standard forwards in that there is a possibility to make a series of multiple forwards with regular maturities. The final rate for all forwards in a given par forward series is determined by the average time weighted forward points for each maturity. Such a rate is usually more advantageous for the client than the average rate of standard forwards.

In addition to the standard benefits of future exchange rate security, another benefit is the single exchange rate for all maturities. Therefore, the client does not receive a different forward rate for each maturity, as is the case with a series of standard forwards. On the contrary, in the case of regular foreign direct debits, the client has the possibility to use one hedging product instead of individual forward trades.

 

We charge no fees for entering into a par forward.

• Signing of a Framework agreement about payment and investment services.
• You are legally obliged to have LEI number.
• Deposit of cash collateral or getting a Dealing limit.
• The minimum amount of the entire compound trade, i.e. one forward par session, is EUR 200.000 or the equivalent in another currency.

 

Date of accepted payment	July 15, 2023	Aug 15, 2023	Nov 15, 2023	Feb 15, 2024	May 15, 2024
Spot exchange rate EUR/CZK sale as of forward contract date	23,800
Par forward agreed exchange rate		24,100	24,100	24,100	24,100
Standard forward rate		23,850	24,030	24,130	24,220
Accepted payment in EUR		150.000	150.000	150.000	150.000

Any drawdown during the par forward term is for the originally negotiated forward rate and at no additional cost.

If a conversion transaction is not carried out / settled within a single forward due date on a predetermined settlement date, the settlement date may be postponed by a swap transaction to postpone the drawdown for an appropriate period. In such a case, the originally arranged partial forward trade will be re-evaluated and a new forward will be concluded based on the current market rates.

By entering into hedging operations, all entities providing such services incur exposures on the counterparty of such transactions. This engagement is covered in the following ways: