Knock-out Options

An FX Knock-out Option is a contract through which an issuer commits to sell a foreign currency on a future date at a more attractive pre-defined rate than the standard…

Layered Hedging Strategy

A layered hedging strategy is a risk management procedure designed to increase flexibility when hedging a company’s future currency exposure. It involves using products with different start and maturity dates…

Letter of credit

A letter of credit is a bank document employed to ensure completion of a transaction between a customer and a supplier. Through this letter, the bank guarantees that payment will…

Leveraged Forward

A Leveraged Forward contract is an over-the-counter derivative product that allows buyers to lock-in more favourable exchange rates than an outright forward for part of their exposure as well as…

Leveraged trading

Leveraged trading is a  trading practice that allows speculators to trade in larger volumes in financial markets, and is very popular in the foreign exchange market. This speculative action has…

Like-for-like settlement

Like-for-like settlement is a payment collection method by which an export company –normally an ecommerce business or an international retailer – receives payments in local currencies. More info

Limit order

A limit order in foreign exchange is a transaction order with an indicated restriction on either the maximum price to be paid in one currency in order to purchase another,…

Line of credit

A line of credit is a loan facility agreement between a lender and a borrower. A total amount is agreed for the credit line. It is extended to creditworthy customers by…

Liquidity

Liquidity is a financial concept that refers to the ability to convert assets into cash. It is crucial for a company to have good liquidity in order to pay its bills…

Liquidity ratio

Liquidity ratios are used to measure the level of cash or assets that could quickly be converted into cash belonging to a company or individual. These assets are what allow…

Liquidity risk

Liquidity risk is a financial concept to define the possibility that a business or individual may become unable to meet their short-term financial obligations. The main reasons for liquidity issues include…

Live exchange rates

Live exchange rates are the only truly accurate exchange rates in the FX market. This is because, like the global currency markets they mirror, they are in continuous fluctuation. Macroeconomic events…

Local currency payment

In global trade, a local currency payment refers to a transaction in which the buyer pays a foreign supplier in the supplier’s currency (rather than in their own functional currency).

Long Currency Hedge

A long currency hedge refers to a strategy aiming to minimise the risk related to cash flows due for settlement at a future date, for instance in one year’s time….

Major currency pair

The major currency pairs, also called the majors, are the most highly liquid, commonly traded currency pairs, accounting for approximately 85% of all foreign exchange market trades. The four most important…