The dealers at this desk deal with bank's customers directly or through the forex designated branches of the bank and complete transactions involving foreign exchange in all major currencies of the world.
It covers the merchant flows i. Some of the very high value merchant transactions are also handled directly at this desk. Along with that, the desk does proprietary trading i. It also quotes and covers the merchant positions. The maturity period of such transactions is usually up to one year though positions in long term forward contracts LTFX are also taken.
The desk also executes swaps for funding and arbitrage purposes. The desk covers gold related spot and forwards transactions. The desk also covers the bullion sale of the bank including sale of gold coins. Desk primarily handles Currency Options and Foreign Currency interest rate derivatives.
Running the books give us an edge over other market participants who quote on back-to-back basis and it also allows us to offer an innovative product line. Most of the products offered are over-the-counter OTC in nature and are tailor made to suit customer specific requirements. Our customer base includes some of the well known Indian corporate with underlines of loans both rupee as well as FC. The foreign exchange transactions done by the branches are reported to the Global Markets for covering those transactions in the inter-bank market.
Forex Markets section has various desks to handle these transactions. The Merchant Desk at the department takes reporting of all transactions involving foreign exchange in all major currencies from the designated branches as well as customer's directly.
These are used to hedge the currency or exchange rate risk. The party buying the contract assumes a long position while the party selling the contract assumes a short position. The market is active upto 1 year. Forwards are traded in the OTC market and hence no standardization of contract is required. The exchange traded variant of the forwards is Futures. The purchase of Gold in the spot and forward markets is undertaken to cover the customer transactions and bullion sale of the bank including sale of gold coins.
Various products involved in designing such solutions are as under:. Interest Rate Swap is an agreement between two parties in which one party agrees to pay cash flows equal to interest at a predetermined rate while the other agrees to pay interest at floating rate on a notional principal amount for a number of years.
A Currency Swap involves exchange of principal and interest payments in one currency for principal and interest payments in another currency. The Principal amounts in each currency are usually exchanged at the beginning and at the end of life of Swap.
The interest rates in both the currencies are fixed. An OTC contract between parties that determines the rate of interest, or the currency exchange rate, to be paid or received on an obligation beginning at a future start date. SBI Official You tube. Important Information on Periodical Updation. Various products involved in designing such solutions are as under: There are mainly two types of options viz.
There are two styles of options which depend upon whether option can be exercised on the expiry or prior to expiry date. The option which can be exercised on the expiry date is called European Option while the one which can be exercised any time during the life of option is called American option.
The buyer of the option has to pay a premium to obtain the right. The option premium dependents on the volatility, strike price, time remaining to expiration, rate of interest. The underlying of an option contract can be stock, currencies, indices, commodities etc. Swap is a contractual agreement to exchange specified cash flows at future dates. The cash flows could be: Fixed to floating interest rates - Interest Rate Swap Or in different currencies - Currency swap, or a combination of these Interest Rate Swap is an agreement between two parties in which one party agrees to pay cash flows equal to interest at a predetermined rate while the other agrees to pay interest at floating rate on a notional principal amount for a number of years.More...