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FX Derivatives: forwards and swaps
Features, Pricing and Applications
Key Facts
| Location | London |
| Length | 1 day |
| Fees | ACT Members and Students £575.00+VAT Non Members |
| Max group size | 25 |
Book now
Contact
For further information about this course please contact:
Samantha Baglioni
Training Development Manager
T: +44 (0)20 7847 2559
E: training@treasurers.org
Further information
What is it about?
Focusing on Forwards and Swaps, this session provides participants with an introduction into how corporate treasury can use FX derivatives to manage FX risk.
The programme addresses not only how the treasurer will benefit, but also delves deeper into price derivation and applications so that the treasurer can present the features, applications, costs and associated risks to the broader finance team to help them demystify some FX structures sold to them by the banks.
A 10% discount will be offered when booking both the FX Derivatives: forwards and swaps and FX Derivatives: options and structured courses on consecutive days.
Table of Contents [hide]
Programme
FX Risk and the Derivatives Universe
- A holistic view of FX exposure – the nature of risks and identifying main sources of risk
- Explaining the consequences of transaction and translation risk
- The nature of the derivatives market – a review of the choices, pros, cons and costs of the products that are available.
Case Study – review of a corporate FX risks and use of derivatives and the implications for Financial Statements
FX forwards
- Review of spot market conventions (assumed knowledge for the most part) before moving onto forward contracts.
- Why use forwards? Some motivators for corporate to use forward contracts
- Calculating a forward FX rate using time value of money concepts
- Defining the terms premium and discount in relation to forward foreign exchange
- Interpreting a variety of forward FX quotations (outright rates vs. forward points)
Case Study – Excel Forward rate calculator, application to forward hedging – selecting the appropriate contract using forwards
Variants of FX forwards
- Explaining the rationale for non-deliverable forwards (NDFs) and calculating the settlement amount in a typical transaction
- Option-dated forwards – managing FX flows with uncertain timing (option dated forwards)
- Determining the price of an option-dated forward contract given the term structure of forward contracts
Case Study – selecting and applying the fair price for an option dated forward given the term structure of forward rates
FX Swaps
- Identify the main features and applications of FX swaps in corporate context
- Explain how swaps are priced and the advantages
- How to treat a swap as a ‘rollover’ and the cash flow implications
Case Study – FX Swap applications for corporates
Who is it for?
- Anyone working in treasury, especially dealers, back office staff
- Anyone working in or with a commercial team with FX exposure in their trade
Knowledge of FX fixing instruments is essential and participants may therefore be interested in the FX Derivatives: forwards and swaps course.
How do you benefit?
By the end of the course you will be able to understand:
- The aspects and impact of FX Risk
- The conventions, pricing and applications in FX forward markets
- Further variants of FX forwards and their uses
