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Foreign exchange trading is understood to be the interbank market. There the trade of internationally active banks and credit institutions takes place in the form of standardized foreign exchange transactions with the trading object foreign exchange. Foreign exchange transactions consist of the basic forms of forward exchange transactions, spot exchange transactions and the resulting currency swaps (derivatives) and currency options.

The forward exchange transaction

A forward exchange transaction is also referred to as a forward, outright or solo transaction. In this case, there is a period of time between the settlement date (on the day on which the transaction is executed) and the day the transaction is concluded of at least 3

working days. However, the time span can also extend over several months. Both parties to the contract must meet the conditions agreed on the day of the transaction (which includes the exchange rate valid on that day), regardless of how the current exchange rate situation has changed.

The forward exchange transaction is thus one of the hedging transactions or exchange rate hedging transactions.

Spot exchange business

In the case of a spot exchange transaction (also referred to here as spot transactions), there is a maximum period of 2 bank working days between the day on which the transaction is concluded and the day on which the claim is fulfilled.

The currency swap transaction

A foreign exchange swap (also known as a swap in short, derived from English to swap exchange) is a combination of a spot and forward foreign exchange sale or vice versa. Here the currency exchange of 2 currencies on the day,

on which the transaction is concluded. However, the redemption action will be carried out at a later date. As this is a combination with a forward exchange transaction, the swap solutions also fall under a currency hedging transaction.

The currency option business

A currency option transaction gives the buyer the right to deliver or purchase a currency at a specified rate and on a precise date within a specified period of time. So that then the buyer receives the option of this right, the seller receives a price from him (the so-called option premium). The seller then has the obligation to provide or receive the currency.