Product Overview 

A foreign currency interest rate swap is a transaction in which the client and bank agree to exchange interest cash flows based on the same notional foreign currency amount according to predetermined rules on settlement dates, with netting settlement. The interest rate swap can involve the exchange of a floating interest rate for a fixed rate, or the exchange of one floating interest rate for another. Through a foreign currency interest rate swap, a client can convert their floating-rate foreign currency assets or liabilities into fixed-rate ones, or convert fixed-rate foreign currency assets or liabilities into floating-rate ones. Alternatively, to hedge the basis risk between two different floating rates, a client can convert foreign currency assets or liabilities linked to one floating rate to those linked to another floating rate. All currencies involved are foreign currencies. 

Clients who have borrowed foreign currency debt or hold foreign currency assets can use foreign currency interest rate swaps to manage foreign currency interest rate risk, or lock in borrowing costs. 

Target Clients 

The product is ideal for corporate clients seeking to hedge against interest rate risks, optimize their asset-liability structure, and address their diverse risk management requirements.

Application Procedures  

Risk Tolerance Assessment: Clients must complete a risk tolerance assessment before any transactions. Bank of China (BOC) can only sell products with a risk rating that is equal to or lower than the risk tolerance level of retail investors.

Account Opening and Agreement Signing: Clients must use a BOC account to execute a foreign currency interest rate swap, and sign relevant agreements with BOC before the transaction. 

Credit Facility or Margin Settlement: A sufficient credit limit or corresponding margin is required. 

Transaction Application and Background Review: Clients must submit an authorized transaction application specifying the details. BOC will review the client's purpose for derivatives trading and the background of their needs to ensure the risk characteristics of the client's underlying assets or liabilities match those of the derivatives transactions. 

Execution: Upon transaction execution, BOC provides the client with transaction confirmation and relevant documents. 

Settlement: Both the client and BOC shall perform the actual net settlement of interest or funds on each interest payment date of the interest rate swap, in accordance with the terms of the contract. Clients can close their positions in advance based on changes in their operations and settle with BOC as agreed.

BOC Advantages

BOC has an experienced team in trade execution and product design, equipped with an efficient pricing mechanism and strong industry competitiveness, enabling it to offer clients high-quality product quotes. As one of the first Chinese institutions to participate in central clearing at the London Clearing House, BOC has been recognized as an outstanding member in foreign currency interest rate swaps by the China Foreign Exchange Trade System.

Risk Disclosure

Before proceeding with the transaction, please carefully read the risk disclosure statement to fully understand and accept the terms and associated risks of the transaction. Potential risks may include, but are not limited to, policy, market, and liquidity.

The above information is for reference only. Specific details are subject to BOC's product documentation. For cross-border exchange services outside the Chinese mainland, local regulatory requirements shall apply.