Foreign Exchange Products

i. Currency option

(also known as foreign exchange option) is a transaction giving one party the right, but not the obligation, to buy (known as a “call option”) from or to sell (known as a “put option”) currency to another party at a specified exchange rate on an agreed future date. For Nittan Asia and Nittan Singapore, currency option transactions involve the buying or selling of Asian currencies, including Renminbi, against the US Dollar.

ii. Asian currency forward

is a transaction involving the sale and purchase of an Asian currency at specific exchange rates on an agreed date. The amount and tenor of the forward transaction can be customized to the needs of the buyer and seller.

iii. Non-deliverable forward

is a transaction in which one party agrees to buy or sell a restricted currency in exchange for US Dollars on a pre-determined date. Restricted currencies are currencies which are subject to foreign exchange controls under their domestic law, and cannot be freely exchanged for another currency. Non-deliverable forwards for which we render brokerage services are often denominated in Renminbi, New Taiwan Dollar and Philippine Peso for one side of the transaction and US Dollar on the other, but do not include Renminbi swaps in Hong Kong and Korean Won swaps in Seoul.

iv. G7 currency forward

is a transaction involving the sale and purchase of a G7 currency at specific exchange rates on an agreed date.

v. Hong Kong Dollar swap

is a currency swap (also known as foreign exchange swap) that involves the sale or purchase of Hong Kong Dollars on one date and the offsetting purchase or sale of the same amount in US Dollars with interest on a future date, with both dates having been agreed when the transaction is initiated. Currency swaps often have one part of the transaction denominated in US Dollars which serves as the benchmark.

A G7 swap can include one part of the transaction denominated in US Dollar, and the other part denominated in any of Japanese Yen, Canadian Dollar, Pound Sterling, Euro, Australian Dollar, New Zealand Dollar and Swiss Francs. If a foreign exchange swap involves an Asian currency on one part of the transaction and US Dollar on the other, it is commonly known as an “Asian currency swap”. Asian currency swaps typically include one part of the transaction denominated in Thai Baht, Singapore Dollar, Malaysian Ringgit, Korean Won, Hong Kong Dollar, Indian Rupee or Indonesian Rupiah.

vi. CNH swap

is a currency swap (also known as foreign exchange swap) that involves the sale or purchase of CNH on one date and the offsetting purchase or sale of the same amount in US Dollars with interest on a future date, with both dates having been agreed when the transaction is initiated. Currency swaps often have one part of the transaction denominated in US Dollars which serves as the benchmark.

vii. Korean Won swap

involves the sale or purchase of Korean Won on one date and the offsetting purchase or sale of the same amount in US Dollar with interest on a future date.

viii. Korean Won forward

is a transaction involving the sale and purchase of Koren Won at specific exchange rates on an agreed date.

Interest Rate and Money Market Products

i. USD/Euro deposits

also known as certificates of deposit in US Dollar or Euro, are interest bearing bank deposits denominated in US Dollar or Euro.

ii. Interest rate swap

is a transaction in which one party exchanges a debt instrument with one stream of interest obligations for another debt instrument with a different stream of interest obligations based on a specified principal amount.

Interest rate swaps that involve one currency only are known as “single currency interest rate swaps”. The single currency interest rate swaps that we broke are denominated in Hong Kong Dollar, Korean Won and US Dollar.

Interest rate swaps that involve exchanging streams of interest payments in two different currencies are called “cross currency interest rate swaps" or "currency rate swap”. We broke cross currency interest rate swaps that involve US Dollar, Hong Kong dollar, Korean Won and, or Japanese Yen.

Interest rate swaps that involve a restricted currency on one side and settled in US Dollars only are called “non-deliverable interest rate swaps”. We are a pioneer in non-deliverable interest rate swaps denominated in Renminbi.

Where the floating rate interest obligations are based on the overnight interest rate of the relevant index (such as LIBOR, HIBOR, SHIBOR) the interest rate swap is also called an “overnight index swap”.

iii. HK Dollar deposits

are interest bearing bank deposits in HK Dollar. Certificates of HK Dollar deposits are usually issued by banks in Hong Kong.

iv. Forward rate agreements

are contracts in which two parties agree on the interest rate to be paid on a future settlement date. The principal amounts are agreed but not exchanged, and the contracts are settled in cash.

v. Deposits

involve lending and borrowing of amounts, denominated in various currencies at the prevailing market interest rate for a period typically ranging from overnight to one year. We offer brokerage services for deposits denominated in HK Dollar, US Dollar, Euro, Japanese Yen and other Asian currencies.