Product Overview

A forward exchange transaction is a contract between a client and a bank to conduct a foreign exchange transaction at a future date. It specifies the currencies, the amount, the term, and the exchange rate, and the currency exchange will occur according to the contract details upon maturity. It is a crucial tool that allows clients to lock in future exchange rates, facilitating hedging and risk management strategies.

Forward exchange transactions can be categorized by their settlement method at maturity into two types: full delivery and non-deliverable forward (NDF) contracts. Based on the choice of settlement date, they can be classified into regular forwards and optional delivery forwards. Regular forwards require settlement on a fixed maturity date, while optional delivery forwards allow settlement within a specified future timeframe.

Target Clients

Forward exchange transactions are suitable for clients with exchange rate risk management needs.

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 forward foreign exchange, 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: On the delivery date, the two parties 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.

BOC's forward exchange transaction service includes a wide range of currencies to meet the diverse trading needs of its customers. This includes major currencies like the US dollar, euro, and Japanese yen, as well as currencies from emerging markets in Asia, South America, and Africa, supporting full delivery and NDF transactions.

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.