What is a Participating Forward?

An FX product that allows you, as importers and exporters, to manage your currency risk and participate in favourable market movements. It's an agreement to set a protection rate for a specified currency amount for a future settlement date.

Understanding Participating Forwards

Watch this short video to learn how Participating Forwards work for importers and how they could help your business in managing your foreign currency risk.

Watch how Participating Forwards could help you manage FX risk | View transcript (DOCX, 20KB)

Benefits

  • Provides you with protection at a fixed, known protection rate.

  • Offers you potential gain from a favourable movement on the participating portion of the transaction amount.

  • There's no premium outlay.

Considerations

  • Your worst case fixed rate is less favourable than the equivalent forward rate.

  • Your gain potential is limited to the extent of the participating portion of the transaction amount.

  • You have an obligation to transact the fixed component at maturity and cancellation of the contract may incur a cost or benefit to you.

What else do I need to know?

Participating Forwards could be suitable if you're a business not wanting to pay a premium, but would like to enjoy protection and a degree of participation without the prospect of triggering an unfavourable rate.

Managing foreign exchange

Movements in foreign exchange rates can impact businesses differently, so it's important to have a strategy tailored to your specific needs.

International Money Transfers for Business

Learn more about sending money overseas for your business.

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