Equity Forward Contract In Broward
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If you want to cancel a Forward Contract, speak to your OFXpert as soon as possible. If we can cancel a Forward Contract, we sell back the currency that was bought at the time of booking, based on the current market rate.
Liquidity: Unlike other financial contracts, forward contracts are not traded on exchanges, so it can be difficult to get out of a contract or change its terms before the maturity date. Settlement: When the contract reaches its maturity date, the settlement happens.
Should you decide to terminate a Forward Contract prior to the maturity date (for example, in the event that the underlying transaction will not be completed), you will transact an equal and opposite transaction in order to reverse the agreed exchange.
The forwards vs. futures distinction lies in their trading methods, as forwards are traded over the counter while futures are traded on an exchange. Futures contracts are traded on exchanges and are standardized and regulated.
Forward Contracts can broadly be classified as 'Fixed Date Forward Contracts' and 'Option Forward Contracts'. In Fixed Date Forward Contracts, the buying/selling of foreign exchange takes place at a specified future date i.e. a fixed maturity date.
Equity Contract means a contract which is valued on the basis of the value of underlying equities or equity indices and includes related derivative contracts.
Suppose that a client has entered into an equity forward contract with a bank. The client (long side) agrees to buy 400 shares of a publicly listed company for US$ 100 per share from the bank (short side) on a specified expiration date one year in the future.
An example of a forward contract would be a trader who enters into a contract to buy 10 million U.S. dollars in exchange for euros, at a rate of 1.2030, with settlement to occur in three months.
Record a forward contract on the contract date on the balance sheet from the seller's perspective. On the liability side of the equation, you would credit the Asset Obligation for the spot rate. Then, on the asset side of the equation, you would debit the Asset Receivable for the forward rate.