Set-and-Forget Hedging Strategy

A set-and-forget or hedge-and-forget strategy is a one-off currency hedging plan, unlike more dynamic options that allow the owner to constantly reassess and adjust the terms of their hedging mechanism. In…

Settlement date

The settlement date refers to the date on which a transaction is due for completion. In the securities markets, there is usually a period between the date the trade date…

Short currency hedge

Short hedging is a currency management tactic that can be used either to speculate or to hedge their currency exposure. In speculative terms, short hedging involves betting that a currency…

Shortcut method

The shortcut method is a qualitative method of analysis approved only by the US accounting standards to test the effectiveness of a hedge relationship. Businesses exposed to market risks involving their…

Single Euro Payment Area (SEPA)

The Single Euro Payment Area is a payment system created by the European Union to increase efficiency in making euro transfers within the euro area and to reduce the…

Soft peg

A soft peg describes the type of exchange rate regime applied to a currency to keep its value stable against a reserve currency or a basket of currencies. Currencies with…

Spot trade

A spot trade is a transaction between two parties – the buyer and the seller – at the “spot rate”. It is the simplest form of foreign currency exchange and…

Stagflation

Stagflation is a term used to describe an economy that is stagnant and experiences little to no economic growth. Signs of stagflation include high rises in the price of consumer…

Stop loss order

Stop-loss orders are automatic market commands that trigger the exit of an open trade to avoid a further decrease in value. Investors may place stop losses on their transactions to…

Subsidiary

A subsidiary is a company, corporation or limited liability company whose controlling interest is owned by another company. The company with a controlling interest (more than 50% of the subsidiary’s voting…

SWIFT

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, a cooperative organisation that operates the SWIFT messaging service, and is recognised as the fastest, most secure method for international…

SWIFT messages

SWIFT messages are the messages generated when funds are transferred internationally using the SWIFT international payment network. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication and is renowned as…

SWIFT payment

A SWIFT payment is a cross-border payment processed through the Society for Worldwide Interbank Financial Telecommunication international payment network. This procedure is internationally recognised as the fastest and most…

Target Redemption Forward

A Target Redemption Forward, or Target Redemption Note is a structured option contract comprising a set of forwards that allows the purchaser to lock in a more favourable exchange rate…

Trade repository

Trade repositories are approved entities that centrally manage and maintain all reported over-the-conter derivative transactions. All counterparties, including financial and non-financial organisations must report all derivative contracts to a trade repository. In…