FX Services

Spot FX

A contract for exchanging one currency for another at a fixed rate of exchange for delivery in two working days' time (this is the market standard settlement, however different “rules” apply to different currency pairs).

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Forwards

With a forward, your business can fix the exchange rate for the payment or receipt of foreign currency in the future.

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Forward Plus and accruals

A forward plus is often used as an alternative to a forward contract and an accrual forward delivers a drip-feed approach.

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Money market trading

Carry out a wide range of dealing services online.

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• Show me RBS credentials for FX services

With a client base of major businesses and institutions, we are a leading international bank for foreign exchange. Our global foreign exchange service offers solutions in over 60 currencies, through traditional and electronic delivery channels.

Key benefits

• Extensive solutions - spanning hedging, trading, investment and structuring
• Tailored approach - innovative, bespoke structures and deals
• Electronic solutions - a broad range of e-trading facilities for trading and deal management
• Analysis and comment - our analysis will support your planning, and our economists and analysts are available for individual briefing sessions
• Options leader - we are a market leader in the pricing of emerging market exotics, committed to delivering first-class execution and settlement

Spot exchange contracts are a type of foreign exchange transaction rather than a solution to mitigate FX risk.

With a Spot FX contract, your business can exchange one currency for another at a fixed rate of exchange and have the funds delivered in two working days' time.

How it works

The rate of exchange at the heart of the contract is determined by the international foreign exchange markets. More precisely, the rate is shaped by a variety of factors. These include the number of buyers and sellers in the market and the prevailing view of economic conditions in the countries involved in the trade.

As there are so many variables that can affect the market's view of the value of a currency, spot exchange rates can be very volatile. So we have developed a range of solutions to manage the risk of rate fluctuations, including forwards and swaps.

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A Forward contract allows your business to guard against future fluctuations in exchange rates.

How Forwards work

Your business fixes an exchange rate now which determines the payment or receipt of foreign currency in the future. So whatever happens to exchange rates before the settlement date, you know the amount of sterling that you'll need to pay for or receive, for a given amount of foreign currency.

• Bespoke solutions – as Forward contracts are available over short or long periods of time, we can devise a solution that matches your business' precise FX needs
• Long-term planning – with Forward contracts available in major currencies, your business will be able to think strategically about international trade
• Enhanced flexibility – we can offer a time option variation on a standard Forward contract, which will allow your business to have a number of smaller-sized settlements on different dates. This is particularly useful if you are unsure of the exact dates when goods will arrive
• Certainty - Forward contracts are legally binding on your business and the bank concerned

Forward contract alternatives

As alternatives to Forward contracts, our product range encompasses more specialist structured solutions which use currency options.

These include the Forward Plus which is designed to limit FX risk and maximise the potential gains of favourable spot rate movements. Equally, Accrual Forwards offer potentially more competitive rates for businesses that opt to accumulate currency over a period of time.

• More on Forward Plus and accruals

A Forward Plus guarantees that you can hedge at a known worst case exchange rate, while benefiting from favourable spot rate movements.

Using a Forward Plus - an example

A company may win a contract to supply goods and have to import the raw materials from the US, paying in US Dollars.

In this case, the company may want to hedge the payment costs as a separate contract - as their budget for the payment costs could be undermined by a move in the exchange rate. This could have the effect of increasing the cost of the raw materials.

So, the company could arrange a Forward Plus based on a lower and upper exchange rate limit with the guaranteed worst case rate to protect the company's anticipated raw materials budget.

Accruals

An accrual forward is used in different circumstances.

It enables your company to accumulate a currency on a drip-feed basis at a rate that's attractive relative to the current forward market. If you cannot achieve the exchange rate you need to hit, for example, your accounting year budget rate through the outright forward market, an accrual forward could be the answer.

With over a thousand online corporate users, we have a proven solution to allow your business can make real-time foreign exchange and money market transactions securely from a PC - reducing costs and cutting paperwork.

RBS Trade is the online foreign exchange and money market trading system behind this service. With it, you can carry out a wide range of dealing services, including spot, forward and time option contracts.

Key benefits

• Real time market access – read our analysis, trade and confirm your transactions all online
• Cost savings – complete FX, MM and Global Treasury Fund trades electronically, to streamline processes and reduce costs
• Reduced errors – eliminate paper-based parts of the trading process, to improve speed and accuracy
• Real-time market information – where speed is of the essence, being able to view market data in real time helps shape success
• Valuable management data – access comprehensive management reports on your treasury activities
• Post Trade – confirm your deals with RBS real-time on our post trade application
• Transparency – RBS FiX offers transparent benchmark execution offering a flexible framework for centralised global execution and transparency (audited to SAS70 TYPE II).

eCommerce products that provide transparency for high volume users

We offer complementary solutions for high volume foreign exchange users called FX micropay - please contact us for more information.