Deal and Deal contingent forward: Difference between pages

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imported>Doug Williamson
(Add 3rd, 4th & 5th definitions. Sources: linked pages.)
 
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1.  ''Corporate actions.''
''Foreign exchange risk management''.


A major corporate transaction such as an acquisition, merger or disposal.
A deal contingent forward is a specialised forward foreign exchange (FX) contract.


The hedging customer is only obliged to fulfil the contract if a planned major transaction, such as an acquisition, occurs.


2.  ''Contract.''


Any financial transaction or trade.
:<span style="color:#4B0082">'''''Reverse complexity'''''</span>


Including ones reached following a period of negotiation about the price, or other terms.
:"There is quite often a risk around the FX of these transactions, which comes from the fact that we are raising equity in sterling to make a euro transaction acquisition.


:Obviously, if the relative value of sterling and the euro changes between the point that you commit to raise the sterling and spend the euros, there is a risk associated.


3. ''Public policy.''
:That involved us putting in place a deal contingent forward.


A high-level policy or aspiration, not necessarily having legal effects itself, but often followed by legislation.
:This is basically a forward contract where the banks agree with you that if the transaction does not occur, then it expires worthless, but if the transaction goes through, then you get a specific FX rate."


For example, the European Green Deal.
:''Adam Richford FCA FCT, Group Treasurer, Renewi, The Treasurer, August 2018, p18.''
 
 
4.  ''Verb.''
 
To strike a transaction.
 
For example, market makers quote (different) buying and selling prices at which they are willing to ''deal'' with their clients.
 
 
5.  ''Professional services - other actions.''
 
To take appropriate administrative and other steps to address an area of responsibility over time, or a problem.
 
For example, a tax agent is a professional specialist appointed by a taxpayer to ''deal'' with the tax authorities on behalf of the taxpayer.
 
As another example, bailin refers to the use of private sector money, rather than public money, to ''deal'' with a failed or failing bank.




== See also ==
== See also ==
* [[Agent]]
* [[Acquisition]]
* [[Bailin]]
* [[Equity]]
* [[Best-efforts deal]]
* [[Foreign exchange forward contract]]
* [[Bought deal]]
* [[Foreign exchange risk]]
* [[Club deal]]
* [[Forward contract]]
* [[Contract]]
* [[Hedging]]
* [[Corporate action]]
* [[Cross currency deal]]
* [[Deal contingent forward]]
* [[Deal date]]
* [[Green deal]]
* [[European Green Deal]]
* [[Market maker]]
* [[New Deal]]
* [[Public to private deal]]
* [[Sweetheart deal]]
* [[Trade]]
* [[Transaction]]
* [[Transaction]]
* [[Underwritten deal]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Revision as of 11:20, 14 July 2022

Foreign exchange risk management.

A deal contingent forward is a specialised forward foreign exchange (FX) contract.

The hedging customer is only obliged to fulfil the contract if a planned major transaction, such as an acquisition, occurs.


Reverse complexity
"There is quite often a risk around the FX of these transactions, which comes from the fact that we are raising equity in sterling to make a euro transaction acquisition.
Obviously, if the relative value of sterling and the euro changes between the point that you commit to raise the sterling and spend the euros, there is a risk associated.
That involved us putting in place a deal contingent forward.
This is basically a forward contract where the banks agree with you that if the transaction does not occur, then it expires worthless, but if the transaction goes through, then you get a specific FX rate."
Adam Richford FCA FCT, Group Treasurer, Renewi, The Treasurer, August 2018, p18.


See also

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