France
29 January 2024
There is quite a lot of industry-specific language around overseas payments, but this quick guide should help clear things up.
BEAR & BULL MARKETS
A Bear Market is when a market is going down over a period of time. A Bull Market is when it’s going up. The unusual phrases comes from the way the animals attack. Bears swipe down, bulls strike up.
BACS
Bankers’ Automated Clearing Services – the process of making Sterling payments through local banks. Generally used in relation to credits and direct debits, BACS payments take three working days to clear.
Cash Transfer
Moving funds from one institution to another. The phrases cash transfer, currency transfer, foreign exchange and currency converting can all be used interchangeably, when talking about moving funds from one country to another.
CHAPS
The Clearing House Automated Payment System. A speedier way of making payments, as funds clear on the same business day.
Currency Converter
An online currency calculator that shows you the value of your money in another currency at the present exchange rate.
Currency Transfer
The movement of money from one location to another, essentially changing one currency for another.
Exposure
In a transaction, exposure is the sum of money that’s at risk, due to foreign exchange market movements.
Faster Payment
When you need to be quick, this UK system can be used to escalate payments of up to £10,000, depending on the bank. Faster Payment usually clears in minutes.
Foreign Exchange Market
Also known as forex, FX or the currency market, the Foreign Exchange Market is where money moves from one global location to another through the trading of currencies.
Forward Contract
A Forward Contacts let you fix a price – based on the current market rate – for buying or selling currencies on a specified date in the future.
Forward Points
The difference between the spot rate and the forward rate. It calculates the interest rate difference between the currency being bought and the one being sold.
Forward Rate
The rate at which two currencies can be exchanged, on a predetermined date in the future.
FX
The industry abbreviation for foreign exchange; the worldwide trading market behind the movement of currencies.
GTC
Good ‘Til Cancelled. A GTC foreign exchange order will sit in the market at a fixed rate until it’s carried out or cancelled.
Hedge
Hedging is protecting your international payments against future currency movements.
Interbank rate
This is the bulk rate at which banks trade currency with other banks.
Mid-market rate
Bought by the customer at the offer rate, and sold at the bid rate, the mid-market currency rate is halfway between the bid and offer rates.
Money Transfer
Common transfer methods of money transfer include electronic funds transfers, wire transfers, Giro and money orders. Money can be transferred between countries in all kinds of ways, depending on the currency and the amount being traded.
OCO
One Cancels Other. This instrument is a hybrid between a Stop Loss order and Take Profit order (both described below). When one of these two orders executes, it automatically cancels the other.
Order
A directive from you that allows us to carry out a transaction on your behalf when the exchange rate you’re looking for is reached.
Settlement date
The date on which funds are transferred and payment can be expected to clear into an account.
Spot rate
The foreign exchange rate at which two currencies can be exchanged in two days’ time.
Spot Transaction
Exchanging one currency for another at a predetermined rate. Settled in two working days.
Stop Loss Order
A way to limit risk if the exchange rate worsens. You set a worst-case scenario exchange rate and we carry out the trade automatically if it’s reached.
Spread
The spread refers to the bank or broker’s profit; the difference between the rate they receive, and the rate they pass on to customers. We prefer to keep our spreads smaller, so we can pass bigger benefits onto you.
Take Profit Order
Once an exchange rate has been reached, a Take Profit order is automatically triggered. The currency level is always better than current market prices, which means you can profit on exchange rate upswings without having to constantly monitor exchange rates.
