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FX Spot

Contract type FX Spot is an agreement between two parties to buy one currency against selling another currency at an agreed price (FX rate) for settlement on a certain date. Entering an FX Spot automatically generates transactions for the two cashflows involved in your contract.

Note

Before FA 3.9, FX Spot was essentially a "two-day FX Forward" - if you defined an FX Spot with something longer than t + 2, the system considered your contract as an FX Forward instead. After FA 3.9, your selection to create an FX Spot is explicit, allowing you to enter FX Spots longer than two business days - dates you enter for your contract don't affect the type of the contract.

For FX Spot, the contract-specific fields allow you to fill in information that is relevant for entering an FX Spot contract into the system.

contracts_FXSpot.png

The fields available are:

Contract date

The date when the contract takes place, i.e. the spot date. For FX Spot, the cashflow transactions occur on the contract date.

Spot section allows you to define all relevant details of the spot itself. You can define your spot in terms of the two cashflows you would be getting on the spot date - information relevant to each cashflow is shown on the same row, with an FX rate in between the two rows.

Settlement date

The date when the contract cashflows settle. The settlement date is pre-filled after selecting the contract date. The settlement date is calculated by adding 2 business days to the contract date (settlement date = contract date + 2D), by default considering weekends in Saturday/Sunday holiday calendar, or if the involved currency/currencies have already been filled in, the combined holiday calendars linked to the selected currencies (i.e. if EUR and USD are using a different holiday calendar, a day is considered a holiday if it is a holiday in either of the involve currencies' holiday calendar). You can also calculate the settlement date with a question mark (?), when the system calculates the settlement date again with the above logic (especially useful if you change the involved currencies and want to make sure afterwards the settlement date is still correct with their linked holiday calendars).

Buy / Sell

Allows you to select the direction of the first cashflow, i.e. whether the currency and amount you enter on the same row next to the field are "buy" or "sell".

Currency

Select the currency of the first cashflow, i.e. the currency you are buying / selling.

Amount

Define how much of the selected currency you are buying / selling.

FX rate (currency cross)

Define the spot FX rate, i.e. the price you agreed to do the exchange between the two currencies you selected. The FX rate is used to convert the amount you have entered on the upper row to the amount on the lower row. The caption of the field indicates the currency cross you should fill in, and you can also fetch the FX rate with a question mark (?), when the system fetches the latest available price for the contract date from the currency cross.

Sell / Buy

Pre-filled to be opposite to the buy / sell selection you made above. Determines the direction of the second cashflow, i.e. whether the currency and amount you enter on the same row next to the field are "buy" or "sell". If you change this selection, the above buy / sell selection is changed accordingly.

Currency

Define how much of the selected currency you are buying / selling. This amount is pre-filled based on the amount you entered on the upper row and the FX rate you defined. If you update this amount, the system automatically calculates the FX rate to ensure all calculations match.

Accounts section allows you to define the accounts affected on the spot date, i.e. which accounts the buy and sell cashflows are directed to.

Account (Currency)

Select the account you want to direct the cashflow in the selected currency to. The account selections always correspond to the cashflow you have defined on the same row on the left, and the caption of the Account field indicates which currency cashflow you should select the account for. The dropdown lists accounts in the selected currency within your selected portfolio, and the account filed is pre-filled if your selected portfolio only has one account in the selected currency.

contracts_FXSpot_outcome.png

When saving an FX Spot, the system automatically creates a contract security and generates relevant cashflow transactions on the contract date.

Component

FX Spot specific details

Contract security

Naming of the FX Spot security:

Syntax:

FX SPOT [date yyyy-MM-dd]: [first cashflow's Currency] [+ for Buy / - for Sell] [first cashflow's Amount] / [second cashflow's Currency] [+ for Buy / - for Sell] [second cashflow's Amount] ([FX rate])

"Date" used in the contract name depends on your selection in contract preferences - date is set either based on the contract date (=transaction date) or settlement date of your FX Spot (available from FA 3.7 onward).

Example:

FX SPOT 2019-05-02: USD +10000.00 / EUR -8919.02 (1.1212)

Cashflows

FX Spot induces two cashflow transactions, one for "buy" and one for "sell". Each cashflow transaction is created based on the information you defined on the same row within the FX Spot fields.

Cashflow transactions are created with the following information (see Contract cashflows for more information).

  • Base type - set as CASH (cash transactions are not linked to a security)

  • Transaction type - set separately for "buy" and "sell" cashflow as defined in contract preferences

  • Transaction date - set as Contract date defined in contract info

  • Settlement date - set as Settlement date defined in contract info

  • Total, Total trade amount - set as Amount defined in contract info for the corresponding cashflow

  • Account - set as Account defined in contract info for the corresponding cashflow

  • (Report FX rate - IF the cashflow is in different currency than your portfolio currency, then set as FX rate defined in contract info)