Securing Risk

Complete overview of products and services included in the section Securing Risk

This list contains an overview of the products and services included in the Securing Risk section of Komerční banka. The product and service overview is arranged in alphabetical order.

• American Forward

  American forward is modification of currency forward, which includes elements of an American type of currency option. The counterparties agree on the usual parameters such as the currency pair, the nominal and the maturity date. The buyer of the American forward is also entitled to request (at any time in the determined period given by the Start date and the maturity date) partial exercising (at any time until the maturity date). If the buyer of the American forward does not exchange the whole nominal by the maturity date of the American forward, the remaining amount of the nominal is settled on this date.

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• Barrier Currency Option

  The Barrier currency option allows the buyer to hedge his or her position against undesirable development of currency rates. Barrier currency options can be divided into ”knock in“ and ”knock out“ types. Knock in type options behave in the same way as currency (call/put) options, if they are activated during their existence. Knock out options behave in the same way as currency (call/put) options, if they are deactivated during their existence (they then expire). The level of risk accepted results from the character of the Barrier currency options.

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• Binary Currency Option

  They buyer of a Binary option invests amount X (the premium) in expectation of receiving higher amount Y (the nominal amount) subject to meeting of defined conditions relating to development of the reference exchange rate.

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• Commodity Forward

  The agreed fixed forward price of a commodity is compared with the closing price of the commodity published on the dates agreed when the transaction is arranged. The difference in the prices, for the given amount of commodity, is paid by the party in the disadvantageous position.

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• Commodity Option

  In general, an option represents the right to purchase or sell a defined instrument on the agreed date. In the case of a Commodity option, instrument is understood to mean exchange of payments from the agreed fixed price of a commodity for payments dependent on the current prices or average prices of the reference commodity. Commodity option allows the buyer to hedge his or her position in terms of an increase or decrease in price of a specific commodity.

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• Commodity Swap

  The agreed fixed forward price of the commodity is compared with the daily closing prices (or with the official, e.g. the official three-monthly pricing average). The difference in prices, for the given amount of commodity, is paid by the party in the disadvantageous position.

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• Cross Currency Swap

  Cross Currency Swap is an agreement on exchange of principals of two currencies and the interest costs relating to these. Party A undertakes to purchase funds in currency 1 from party B for a certain amount of funds in currency 2, on a fixed date and also undertakes to sell back the same amount of funds in currency 1 for a certain amount of funds in currency 2 at the same exchange rate and on a later fixed date, no later however than within one year from conclusion of the transaction. Over the course of the transaction, the parties mutually pay interest on the currencies, which they purchased from each other at the start of the transaction.

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• Currency Forward

  The Currency forward product is purchase or sale of one currency for another currency subject to a rate agreed in advance by the participating parties. Settlement of the transaction takes place with a forward value date (i.e. longer than 2 working days from the date the transaction is agreed).

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• Currency Option

  The Currency option product represents the right (option) to purchase or sell a specific amount of one currency for another currency subject to the foreign exchange rate agreed by the participants in advance on the agreed date.

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• Currency Spot

  A Currency spot operation is purchase or sale of one currency for another currency subject to a rate agreed in advance by the participating parties. Settlement of the transaction takes place as standard with a spot value date, i.e. two working days after the date the transaction is concluded.

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• Currency Swap

  A Currency swap (or also Foreign exchange swap) operation is a combination of two transactions, spot and forward. This product consists in sale of one currency for another currency with settlement no later than on the spot value date and buyback/resale with settlement on the forward value date. Both transactions are concluded at the same moment.

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• Extendible Bonus-Reset Forward

  Extendible Bonus-Reset Forward allows the client to implement several currency forwards for a significantly more advantageous exchange rate than usual for zero initial costs. However, the client does not know the resulting exchange rate or exchanged nominal until the maturity date. The transaction can be extended by the extendible period.

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• Extendible Forward

  Extendible forward allows the client to implement several currency forwards for a significantly more advantageous exchange rate than usual for zero initial costs. However, the client does not know the exchanged nominal or whether the exchange will take place at all until the maturity date of individual currency forwards.

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• Extendible Structured Knock-In Forward

  Extendible Structured Knock In Forward allows the client to implement several currency forwards for a significantly more advantageous exchange rate than usual for zero initial costs. However, the client does not know the resulting rate, the exchanged nominal or even whether the exchange will take place at all until the maturity date of individual currency forwards.

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• Forward Accumulator

  Forward Accumulator allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. However, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward Accumulator.

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• Forward Accumulator with Knock-out Barrier

  Forward accumulator with Knock-Out barrier allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. On the other hand, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward accumulator.

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• Forward Boost

  Forward Boost allows the client to implement a currency forward for an agreed nominal amount for a more advantageous exchange rate than usual for zero initial costs.

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• Forward Corridor

  Forward Corridor allows the client to implement a currency forward for an agreed nominal amount for a more advantageous exchange rate than usual for zero initial costs.

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• Forward Rate Agreement

  An FRA transaction(Forward Rate Agreement) is a contract between the bank and the client, the subject of which is an agreement on the future interest rate for a particular deposit or loan within a certain agreed future period of time, whereas no actual provision of a loan or acceptance of a term deposit occurs between the contracting parties, but only exchange of the difference between the interest agreed in terms of the FRA transaction (“FRA rate”) and the current market interest listed on the financial market in the agreed future period of time for the term deposit or loan, which precisely corresponds to the conditions of the FRA transaction.

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• Forward Scoop

  Forward Scoop allows the client to implement a currency forward for an agreed nominal amount for a more advantageous exchange rate than usual for zero initial costs.

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• Interest Option

  In general, an option represents the right to purchase or sell a defined instrument on the agreed date. In the case of an interest rate option, the instrument is understood to mean exchange of payments from the agreed fixed rate for payments from the determined reference interest rate. Interest rate option allows the buyer to hedge his or her position against increase or decrease of interest rates.

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• Interest Swap

  Interest rate swap is an agreement on exchange of cash flows denominated in one currency, which are derived from a fixed or variable basis. Party A undertakes to pay party B the agreed fixed interest on the agreed principal for the agreed period on the agreed maturity dates and at the same time, party B undertakes to pay party A the agreed variable interest on the agreed principal for the agreed period on the agreed maturity dates.

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• Mark-to-market Forward

  Mark-to-Market Forward allows the client to secure himself or herself against exchange rate risk and at the same time, limit the maximum risk of negative revaluation in the event of inauspicious development. The parties to the transaction agree on a forward exchange rate and on a rate limiting the maximum risk of negative revaluation.

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• Mini Range Forward

  Mini Range Forward allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs.

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• Permanent Forward Accumulator

  Permanent forward accumulator allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. On the other hand, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward Accumulator.

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• Permanent Forward Accumulator with Knock-out Barrier

  Permanent forward accumulator with Knock-Out barrier allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. However, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward Accumulator.

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• Ratchet

  Ratchet allows the client to implement a set of currency forwards for a more advantageous exchange rate than usual for zero initial costs. The resulting right or obligation of the client to exchange the standard or increased transaction nominal and the resulting exchange rate depends on the development of the reference spot rate, more precisely, on breaching of the defined barriers.

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• Soft Forward Accumulator

  Soft forward accumulator allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. On the other hand, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward accumulator.

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• Soft Forward Accumulator with Knock-out Barrier

  Soft forward accumulator with Knock-Out barrier allows the client to implement a currency forward for a more advantageous exchange rate than usual for zero initial costs. On the other hand, the client does not know the precise nominal, which will be exchanged, until the maturity date of the Forward accumulator.

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• Swaption

  Swaption represents the right to enter into swap on some future date. The buyer of swaption gains a right (not obligation) to close a swap (swap defined in advance – notional amount, exchanged interest payments, calculation periods, maturity) with the seller of the swaption.  The buyer pays option premium to the seller for this right.

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• Target Accumulator

  Target accumulator allows the client to implement a series of currency forwards for a more advantageous exchange rate than usual for zero initial costs. The client does not know the precise nominal, which will be exchanged, until the maturity dates of the individual forwards. If the target amount is accumulated, the transaction ends and the remaining currency forwards are not settled at all.

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• Trading with Emission Permits

  Trading with emission permits allows the client to optimise the number and structure of permits held, or gain free capital. Trading with emission permits is subject to value added tax.

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