Forward Rate Agreement – FRA
A forward rate agreement is similar to a fx forward transaction. In an over-the-counter transaction, one of the parties borrows or lends a predetermined amount of money at a predetermined interest and maturity.
The party who borrows is in a long position, and the party who lends is in a short position. The transaction is essentially financially settled, where the difference between the interest agreed at the time of the transaction and the interest realised at maturity is recorded for the nominal value of the transaction (in a net manner).
Benefit
- With this product, it is possible to determine the interest on a credit or a loan in advance.
- We can fix the price of a short-term security that we want to buy or sell in the future.
- If we take the FRA, the product can be used as a hedge against falling interest rates; while in the event of a selling, the FRA provides coverage against rising interest rates.
Risks
- If not concluded by the client as a hedging asset, there is a risk of a change in the interest rate level.
- In the event of an early closure, a loss may occur on the transaction if
the interest rate on the underlying product changes in a direction unfavourable
to the client.
Experts
If you would like to become a client of OTP Global Markets, feel free to
contact us.
Attila Preisz
Head of Department
Zoltán Ballai
Deputy Head of Department
Péter Nagy
Senior Sales
Lilla Zsuzsanna Mohos
Sales
Csinszka Kis-Böndi
Sales
Useful documents
These documents in English language to the person concerned
shall be for information purposes only. OTP Bank Plc shall fulfil its obligations imposed by the
legal regulations or requirement of supervisory authority by the documents in
Hungarian language.
In the
event of any discrepancy between the English language and Hungarian language
versions, the Hungarian language version shall prevail.
Information on the suspension of the market making obligation (available only in Hungarian)
Cross-Currency Interest rate swap
Dual currency structured investment
Forward deal in precious metals (gold and silver) transaction
Long-Term Investment Account T+3 FORWARD
Stock exchange spot transaction
Notice on the uEMIR Notice se of LEI CODES
Disclosure of information pursuant to Article 11 (11) of the EMIR Regulation
Information for Clients on MiFID
Global Markets ex-ante cost transparency information (available only in Hungarian)
Systematic internaliser - quotes
Notice on the use of LEI CODES
Direct and indirect clearing services in respect of certain derivative transactions announcement
Notice - on the impacts of the pandemic emergency on the money and capital markets
Terms and conditions
Announcements