What is a Currency Protection and Participation Contract?

A Currency Protection and Participation contract allows you to choose a rate that protects you from exposure to adverse movements beyond this level; at the same time providing you with the opportunity for unlimited participation in favourable movements beyond it.

Exchange rate at maturity will be the more favourable of either the protection rate or the prevailing spot rate, each adjusted to include the protection margin.

Benefits

  • Provides you with a fixed, known rate should the currency move unfavourably.

  • Offers you unlimited gain potential from a favourable rate movement.

  • There's no upfront premium payable.

Considerations

  • The cost (or protection margin) is embedded into the rate of exchange at maturity.

  • You have an obligation to transact at maturity.

  • Cancellation of the contract may incur a cost or benefit to you.

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