(1) spot trading. Also known as "cash transaction", it generally refers to foreign exchange transactions that must be settled on the same day. However, in Japan and Asia, spot transactions between foreign exchange banks are mostly settled on the second working day. Spot transactions in Europe and America are generally settled within two working days after the transaction.
(2) Forward foreign exchange transactions. Also known as "forward foreign exchange transaction", it refers to the foreign exchange transaction that the buyer and the seller do not need to pay their own currency or foreign exchange immediately when the sales contract is established, but agree in advance to settle on a specific date in the future. Under normal circumstances, large foreign exchange transactions are mostly carried out in the form of forward transactions.
The main functions of futures exchange transactions are hedging and speculation. Hedging refers to selling or buying foreign exchange with an amount equal to foreign currency assets or liabilities, so that the value of foreign currency assets or liabilities expressed in local currency is not affected by exchange rate changes; Speculation refers to intentionally holding long or short positions in foreign exchange according to the expectation of exchange rate changes, hoping to profit from exchange rate changes.
(3) Swap transactions. It refers to a foreign exchange transaction in which you buy foreign exchange and sell the same amount of the currency at the same time, but the delivery dates of the buying and selling are different. There are usually the following forms:
(1) fixed-point forward. That is, while buying or selling cash, selling or buying forward foreign exchange. This is the most common form of swap transaction. For example, if a bank has temporary excess foreign exchange funds on hand, but needs to pay them in the future, it can sell the temporary excess funds to other banks in the form of spot trading and repurchase them in a long-term way.
② Long-term versus long-term. That is to say, while buying or selling short-term futures of a currency, selling or buying long-term futures of a currency. The advantage is that you can take advantage of favorable exchange rate opportunities. For example, a bank in Germany will pay $5 million in six months and receive another $5 million in revenue a month later. The market exchange rate is:
Spot: 1 USD = 2.1500/2.1510 Deutsche Mark.
One-month forward: 1 USD = 2. 1450/2. 1470 Deutsche Mark.
Six-month forward: 1 USD = 2. 1220/2. 1250 Deutsche Mark.
If a forward-to-forward swap transaction is conducted, you can buy a six-month forward (2. 1250 DM) and sell a 1 month forward (2. 1450 DM), then you can get a net income of o.020 per 1 USD.
Tomorrow versus the day after tomorrow. That is, the second working day (tomorrow) after the transaction will be delivered, and the third working day (the next day) will be delivered in reverse. It is usually used for overnight interbank borrowing.
(4) selective foreign exchange trading. Selective trading means that the buyer can deliver at the agreed exchange rate on any day in a certain period of time in the future (usually within one and a half months). Therefore, selective foreign exchange trading is a kind of transaction with uncertain delivery date and belongs to the category of forward foreign exchange trading. The advantages of selective trading are: providing flexibility for enterprises and importers to buy and sell foreign exchange, ensuring timely payment of foreign exchange on cash on delivery or cash on delivery, and avoiding the shortcoming of fixed delivery date of forward transactions. Disadvantages: because banks usually calculate discounts on the last day of delivery, the longer the selection period, the more customers will lose, and if customers want to get the convenience of term selection, they will lose more discounts.