Glossary

Forex: - Abbreviation for foreign exchange.

Swift: -Society for Worldwide Interbank Financial Telecommunications

Swift transfer: - Formerly called a Telegraphic Transfer (TT). The expression is used when making electronic foreign currency payments overseas through a banking system, (i.e. swift).

CHAPS: - (Clearing House Automated Payment System), an electronic means of making GBP payments whereby the corresponding account is credited the same day. (For transfers within the UK)

Spot contract: - The most commonly encountered type of contract. It is used when a certain currency is required immediately and a contract is entered where one can receive the current market rate but with settlement in 2 working days.

Forward Contract: - A contract to exchange a particular amount of one currency for another on a future date at a pre-determined rate. (Margin is normally required for forward contracts).

Limit orders: - Clients can place limit orders to try and get a price that is not currently traded in the market.

Spot rate: - The foreign exchange rate at which two currencies can be exchanged in 2 days time.

Contract: - A legally binding agreement (verbal or written), between two parties.

Value Date or Maturity Date: - A pre-agreed date upon which currencies are exchanged.

Trade Date: - The date upon which a trade is agreed.

Inter-bank Rate: - The benchmark exchange rate for any given currency.  This is the rate at which banks exchange large volumes of currency between themselves.

Spread: - Difference between buy and sell price (diff. between bid and offer prices)

Forward Points: - The difference between the spot rate and the forward rate.

Margin: - A deposit made available by the client and held by Swift Forex Ltd as a security against forward trades.

Settlement Date: - The date set for the exchange of payments between the two parties.

Draw Down: - When the maturity date of a forward contract is brought forward, (i.e. nearer to today’s date)

Points/Pips: - The denomination of a rate quoted to four decimal places.

Volatility: - Measure of movements in currency markets. In general, high volatility means high unpredictability, and therefore greater risk.

(Please do not hesitate to contact us if there is anything else you would like us to explain.)