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Glossary

» Beneficiary: The recipient of funds that are being transferred. A beneficiary bank is where the bank account of the beneficiary is held.

» BIC/ Bank Identifier Code: A code used to identify an individual branch of a bank by using the SWIFT network.

» Cash Letter: A check from one of your customers (payable to InterCredit) in a currency other than US Dollars. You are quoted an exchange rate subject to the receipt and clearance of the funds in an InterCredit bank account.

» Direct Debit: Permission to allow InterCredit to debit funds automatically from a selected bank account, to cover any payment instructions created.

» Draft: An international check issued by InterCredit.

» Forward Contract/ Foreign Currency Forward: A foreign exchange instrument that allows you to lock in a favorable exchange rate by purchasing a set amount of a foreign currency at a fixed price for a future payment obligation.

» Fixed Forward: Specifies a precise future date when the full contract must be settled.

» Forward Drawdown: A wire transfer created using an existing Forward Contract.

» Forward Points: Percentage point additions/deductions from a currency’s spot price based on interest rate variances between the two countries.

» Good Funds: Monies that are unconditionally and freely available for use.

» IBAN/ International Bank Account Number: An International Bank Account Number contains an organization’s account number, preceded by the specific country codes and branch number. They are typically used for Euro payments to avoid any extra beneficiary bank charges being applied by the receiving bank.

» Incoming Wires/Drafts: The receipt of foreign currency payments — either electronically or as a draft.

» Indicative Rate: An unconfirmed directorial rate that can be used as a guide. Usually quoted outside of normal business hours or when it is not possible to quote a current market rate.

» Intermediary Bank: A bank nominated to receive payments on behalf of those banks that cannot have payments sent directly to them (because they are not supported in the SWIFT network or because the currency being sent is not the beneficiary bank’s local currency). E.g. A U.S. dollar payment sent to a beneficiary bank in India would be routed via an intermediary bank in the United States that has a relationship with the beneficiary bank.

» Intraday Spot: Where a rate and an amount are locked in. It can be used to draw down several payments or just one total amount.

» Local Currency: A country’s domestic currency. E.g. Dollar in the United States or Sterling in the United Kingdom.

» Maturity Date: The date for settlement or expiration of a Forward Contract.

» Payee: See Beneficiary.

» Payment Reference: A unique 16 digit FX International Payments reference number applied to every payment.

» Payment Scheduling: Similar to a standing order, payment scheduling allows FX IP clients to plan payments with funds automatically being sent as per their chosen schedule in the future – the client can choose selects the frequency of Payments, can select whether to continue the payments until further notice (ongoing) or can select an expiry date (future dated) or may enter a number of installments to be paid.

» Quote: A Quote will give you the cost to exchange a certain amount in a given currency.

» Routing Number: A code used to identify an individual branch of a bank utilizing the local market clearing system.

» Settlement Date: A term used to describe the date on which a trade will be delivered. Also known as the Value Date. For spot transactions, this is typically two working days after the transaction date.

» Settlement Method: The method of payment used to fund a wire transfer, draft or forward contract.

» Same Day Value: A method of buying or selling foreign currency in which the value date is the same day as the trade date. Products commonly “sold at same day value” are wire transfers. However, this can only be achieved in certain currencies due to the time zones of banking systems.

» Spot/Spot Value: A term describing a foreign exchange transaction in which the settlement date follows within two working days of the trade date. Drafts and wire transfers are typically “sold at spot.”

» Spot Payment: Spot Payment leaves the rate floating until a client with single verification accepts it or a client with dual verification approves it.

» Transaction Date: The date on which a transaction is initiated/agreed.

» Value Date: See Settlement Date.

» Window = a: Specifies a future date range during which payments can be made until the total contract amount is settled. This is known as “Drawing Down”.

» Wire Transfer: An electronic payment order transferring funds from one bank to another.

» Closed Forwards
: A closed forward is the most price efficient type of contract due to the fact that they are booked for expiry on a specific date. By limiting the date at which the contract can be drawn down or exercised, you obtain the most favorable price possible.

» Open Window Forwards: Open window forwards offer a range of dates, up to three months, whereby the contract can be drawn down or exercised. This increase in flexibility may in some cases result in a slightly less favorable rate based on the interest rate differential between the two currencies in question.

» Non-Deliverable Forward Contracts: NDFs, as they are known, can be executed in many currencies for which there isn’t a fully functioning local market, such as Brazil, Russia, India and China, amongst others. Alternatively, these contracts can also be employed with major currencies where there is an underlying commercial foreign currency risk, but no impending foreign currency payment. At their core, NDFs offer the ability to hedge against foreign currency risk, without obligating you to a principal payment at the contracts conclusion. In this sense, they can be regarded as a pure currency hedge.

» Market Orders: Global currency markets trade 24 hours a day, 6 days a week. Cambridge’s market orders provide you with access to foreign currency markets around the clock, thereby allowing you to take advantage of favorable trading conditions outside of normal office hours. Our traders and systems monitor currency markets across all active trading sessions, meaning that we can monitor the market for you, even while you’re asleep.

» Take Profit: Commonly referred to as a “bid,” or a standing order, a take profit order allows you to specify an exchange rate and an amount of foreign currency that you would like to buy or sell via a spot, forward or option trade, and if the market moves favorably to your desired price level, it is automatically executed. Take profit orders can be placed on either an overnight basis, or “good-til-cancelled,” which means that the order will remain in force until it is either executed in the marketplace or canceled by you.

» Stop Loss: A stop loss can simply be viewed as the opposite of a take profit order. In its simplest form, a stop loss allows you to set a worst case exchange rate at which you would like to execute your spot, forward or option trade, thereby protecting yourself in the event of a sudden and violent unfavorable market movement. If the market trades to your worst case level, your trade will be automatically executed. Again, stop loss orders can be placed on either an overnight or “good-til-cancelled” basis.

» Order Cancels Other (OCO)
: An OCO is effectively a combination of both a take profit and stop order, whereby you set an exchange rate level at which you would ideally like to execute your trade as well as a worst case price level in the event that the market moves against you. If the market then moves such that one of the two orders is executed, the second order is automatically cancelled so that there is no risk of your order being double booked. As with our other market orders at Cambridge, OCO’s can be placed on either an overnight or “good-til-canceled” basis and can be placed for spot, forward or option trades.