Fixed Income Products

Retail Dutch Auction Sales enables customers to buy official ECCB money to finance their trade transactions like importation of machineries, petroleum products, automobile, chemicals and raw materials through LCs & Bills for collection, the customer typically establishes a form ‘M’ or to finance eligible invisible trades– in which case a Form ‘A’ is established.

Export Proceeds: This usually consists of purchases of inflows accruing from sales proceeds of individuals and corporate customers like oil companies. Either directly from client account or through other banks. Inflows from these sources guarantee steady appropriate price funding for trade transactions.

In addition to saving of foreign currency in GBP, EUR & USD, Treasury also offers fixed deposit accounts in foreign currencies

A confirmation line is a credit facility granted by correspondent banks to enable us confirm letters of credit without necessarily providing cash cover/collateral. The Confirmation line product is therefore a substitute for the requirement of cash collateral. The correspondent banks are simply selling their name and assuming the payment risk. The correspondent banks are willing to dispense with the requirement for cash cover and add their name to the LC. They really do not part with cash immediately.

This is an exchange rate or currency derived from other quoted currencies. In Eastern Caribbean, the ECCB only sells USD and any currency outside the USD is considered a 3rd Currency. Due to the volatile nature of this market, price confirmation must be done swiftly.

This is a binding obligation to exchange a given size of one currency for another at a predetermined price at a date beyond two days typically 1, 3, 6 months in the future. It is typically used to hedge against adverse movements associated with future exchange rates against exchange rate risk. Hedging guarantees a minimum price and/or maximum a customer will pay or receive for a commodity. A guaranteed price or price range will reassure the bank that the customer will be able to meet its principal and interest commitments on a loan facility. A Forward contract may be assessed through the ECCB or Interbank windows. No Premium is payable in a Forwards contract, however, Mega International Commercial Bank Co. Ltd. may request for a margin deposit (difference between spot rate and Forward rate). This is to cover the risk in case customer is unable to perform contract on the settlement date. Before entering a Forward contract, both counter parties must sign a Master Agreement (ISDA: International Swaps & Derivatives Association Agreement) .

FX swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates (normally spot to forward). For,if need USD knows that in the future, agreed exchange risk that the way that adversely affect the contractual parties.

A contract that grants the holder the right, but not the obligation, to buy or sell currency a specified exchange rate during a specified period of time. For this right, a premium is paid to the broker, which will vary depending on the number of contracts purchased. An option allows currency traders to realize gains without having to purchase the underlying currency pair. 

There are essentially two types: A Call and a Put option