Product Overview

A foreign currency swap is where a customer enters into a foreign exchange swap agreement with a bank. This transaction involves exchanging a currency pair at a spot or forward exchange rate on a set value date, while simultaneously agreeing to a reverse exchange at another forward exchange rate on a different value date.

With foreign currency swaps, customers can lock in exchange rates for both the initial and final settlement dates, effectively reducing the risk of exchange rate fluctuations. These swaps offer customers the flexibility to optimize their foreign currency liquidity, improve the efficiency of currency use, and address the risk management needs related to maturity mismatches in foreign currency funding.

Target Clients

This product is suitable for customers with mismatches in the maturity of foreign currency funds and require exchange rate risk management.

Application Procedures

Risk Tolerance Assessment: Customers 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: Customers must use a BOC account to execute a foreign currencies 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: Customers must submit an authorized transaction application specifying the details. BOC will review the customer's purpose for derivatives trading and the background of their needs to ensure the risk characteristics of the customer's underlying assets or liabilities match those of the derivatives transactions.

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

Settlement: On the delivery date, the two parties involved in the transaction conduct the forex settlement according to the agreed contract terms.

BOC Advantages

BOC is an important market maker in the interbank foreign exchange market and has been recognized as the Best Renminbi-Foreign Exchange Market Maker by the China Foreign Exchange Trade System for several years.

With the established trading network and numerous trading counterparts in the international market, BOC is able to provide customers with high-quality and efficient quoting and trading services.

Customers can apply for the forward transactions through multiple channels, including BOC branch counters and corporate online trading platforms.

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.