FMS Flashcards
It is the price for one unit of the commodity. It is essentially the amount of currency that paid for 1 unit of the commodity currency.
Terms Currency
FX contract wherein settlement is beyond spot value date. Exchange rate is determined by the current spot rate and interest rate differential of the two currencies involved
Forward rate
It is the simultaneous purchase and sale of FX for different value dates (i.e. Spot + Forward)
Swap
The FX forward contract is also known as what:
Deliverable forward or Plain- Vanilla Forward
gives bondholders the right but not the obligation to sell their securities back to the issuer at a pre-determined price and date
Puttable (Put option)
A derivative is a security whose price is dependent upon or derived from one or more
Underlying assets
Develops solutions for trading and client requirements, enabling the business to deal in and/or offer a variety of financial products and services.
Product Management Division
It is a structure that uses both an underlying bond and a Cross Currency Swap.
Asset Swap
Handles peso and dollar funds generation through deposits and other investment products
Institutional Fixed Income Sales Division
In an FX Swap, the first exchange is called what and where a spot rate is used.
Near Leg
Who issues the Fixed-Rate Corporate Bonds (PHP)
Prime Domestic Corporations
It is an agreement to buy/sell one currency against the other for settlement up to T+2
Spot
It is a single currency plain vanilla IRS agreement wherein one party agrees to pay a series of fixed rate interest payment while
the other party pays a series of floating rate interest payment based on a notional principal.
Interest Rate Swap
It is the amount borrowed and it is given back to the investor on maturity date at its maturity value.
Par Value/ Face Value
It is just the future value of the spot rate, given current interest rates
Forward rate
Who are the typical sellers of Foreign Exchange?
Exporters, BPOs, Remittance, OFWs
What’s the formula of the swap points
Spot Rate x IRD x T/360
Day-to-day potential for an investor to experience losses from fluctuations in foreign exchange and security prices.
Market Risk
Who are under the primary markets
On the first issuance of:
1. Government
2. Corporations through IPOs
It can be seen as a combination of the two swap contracts
Cross Currency Swap (CCS)
Services corporate needs on foreign exchange requirements. Cross-sells other FX products and/or services to corporate clients, including forwards, swaps, and other derivative instruments.
Corporate & Commercial FX Sales Divisions
What is the benefit of the Asset Swap (ASW)
Yield enhancement and portfolio investment diversification
Minimum Investment amount for the T-Bills, RTBs, FXTns
Php 500,000 in par value
Who are the buyers/holders of bonds?
Individuals, Corporations, or organizations
How do you compute for the IRD or otherwise known as Interest Rate Differential
PHP interest rate- USD interest rate
If the coupon rate is lesser than the market rate, the bond is:
At a DISCOUNT
It is the selling rate of the bank
Offer rate
In contrast to the plain vanilla IRS, a CCS involves the
The Exchange of the face amounts
Is it the buying rate of the bank
Bid rate
Handles distribution of domestic and foreign fixed income securities to corporate clients and financial institutions.
Institutional Fixed Income Sales Division
Statistical estimate of the maximum potential loss in the value of the trading portfolio under normal market conditions, for a given time horizon and confidence level.
Value at Risk (VaR) – A tool to control trading losses
Corporate or Government bonds through the second market can be obtained through:
- Broker
- Via Exchange
- OTC
It is merely a contract between two or more parties with its value determined by fluctuations in the underlying asset.
Derivative
What’s the T-Bills Interest Payment schedule
Discounted; par/nominal value payable on maturity date
If the coupon rate greater than the market rate, the bond is:
At a PREMIUM
What is the minimum investment for Fixed-Rate Corporate Bonds
(USD)
Usually minimum trade lot is $200,000
Handles distribution of domestic and foreign fixed income securities to retail clients thru the Bank’s branch network (RBB) and Wealth Management Group (WMG)
Treasury Retail Sales Division
The second exchange is called what and it is where a forward rate is used.
Far-leg
It is the currency that is being bought or sold
Commodity Currency
It is an instrument of indebtedness of the bond issuer to the holders. It is a form of loan or IOU.
Bond
It is a contract that simultaneously agrees to buy (or sell) an amount of currency at an agreed rate and to resell (or repurchase) the same amount of currency.
FX Swap
Risk of principal or loss of a financial reward as a result of the failure of the borrower to repay a loan.
Credit Risk
Who are the typical buyers of Foreign Currency?
Importers, Investors, and to pay USD loans
Who are the issuers of the bonds?
Government and Corporations
Leads the research and development of robust, effective market and macroeconomic views aimed at helping the Bank acclimate its strategies and/or operations with emerging market conditions, issues, and trends.
Economic and Markets Research Division
occurs whenever a borrower is expecting future cash flows to pay a current debt.
Credit Risk
It gives the bond issuer the right but not the obligation to redeem its issue of securities before the bond’s maturity. The issuer usually pays the bondholders a premium
Callable (Call Option)
Sources fixed income securities via best execution for clients of Treasury Retail Sales and Institutional Fixed Income Sales
Broker Department
Risk of loss attributable to people, processes, and systems.
Operational Risk
It is a trading between the buyers and sellers.
Secondary Market
How do treasury generate funds?
CASA, Time Deposit, LTNCD
How does Treasury mainly works?
Funds Generation -> Monitoring -> Deployment/ Asset Generation
It is an intermediation cost
Effective Cost
How much is the rate for the short term products for CA/SA, Short-term products; 5 years
CA/SA- No DST
Short-term products- 0.0075
5-Year Products- 0.0015
What is the RR (Reserve Requirement) for universal and commercial banks effective June 30, 2023
9.5%
Under Liquidity Management, give at least 3 funding options.
- Corporate Market
- Repo with other banks
- Interbank Market
It is the Lender of Last Resort
BSP
Bank pays both principal and interest (i = prt) at maturity date
Time Deposit
Possesses similar characteristics with that of a time deposit, but negotiable
Certification of Deposit
Entity lending the cash/ buying the security (collateral)
Buyer (Reverse Repo)
Entity borrowing cash and selling the security (collateral)
Seller (Repo)
It short-term, unsecured, negotiable, and issued at a discount. It is usually issued by companies with good credit ratings
Commercial Paper
Differs from a fixed-rate bond as interest is variably linked to a financial index adjusted periodically.
Floating Rates Notes
An obligation on the part of the issuer to pay its investors the interest (e.g. quarterly, semi-annual) and principal at maturity
Fixed-Rate Bonds
A bond is also a form of what:
Loan or IOU
In CBC, who issues or underwrites Corporate Bonds
China Bank Capital Corp.
Days counted from last coupon date up to the value date
Accrued Days
What are the common underlying assets:
- Stocks
- Bonds
- Currencies
- Interest Rates
- Market Indexes
Hedging tool allows client to _______ the price today for currency that is to be _________ or _________ for settlement in the future.
Lock in; Bought or Sold
Cross-sells various financial products to both retail and institutional clients of the Bank catering to their investment and hedging needs.
Market Sales Group
What is the term of T-Bills?
91 days; 182 days; 364 days
