Futures and Forex Glossary Dictionary I2

Agreement entered between counter-parties in a foreign currency transaction where one party will pay periodic interest payment on a predetermined dollar principal

The higher the inflation rate, the lower the value of the currency as propounded by the economist Irving Fisher

Sponsored by the troika of British Bankers Association, Canadian Foreign Exchange Committee and the Tokyo Foreign Exchange Market Practices Committee and published in 1997 it forms a standardized agreement between two parties for the exchange of currencies reflecting the best practices for transactions in the foreign exchange market.

International financial institution that resolves short term balance of payment problems of its members and also oversees foreign exchange arrangements of member countries.

Division of Chicago Mercantile Exchange overseeing trading of financial futures.

Worldwide confederation of National standards organizations. Also called International Standards Organization

An option contract having an intrinsic value, as for instance, a call option is in the money when its exercise price is below the present price of underlying asset; and a put option is in the money when its exercise price is above the market price of the underlying asset.

High and low price of a currency within the day.

A future’s expected net cash flow at a future date discounted by the appropriate rate of return

An individual or entity who introduces clients to a foreign exchange broker either for commission or receiving a part of the spread. Related Term: Brokerage

Borrowings made by a bank from the interbank market and investing the money locally at a higher interest rate. The spreads constituting the interest differentials between the borrowed funds and the deployed funds enables the bank to profit. Related Term: Arbitrage

Standard three letter currency codes comprising ISO 3166 two letter country code plus third letter representing the currency’s name. Example: Japan’s currency code JPY-JP