Glossary of Terms

In addition to the definitions which appear in the Standards MT General Information, Glossary of Terms the following terms apply to Category 3 message types:

Accrued Interest   

The interest that has been earned but not yet been paid.

Call/Loan Deposit   

Loans payable on demand (call) or subject to a period of notice (notice), or deposits that may be withdrawn with (notice) or without (call) advance notice.

Certificate of Deposit (CD)   

A certificate issued by a financial institution against currency deposited. The certificate entitles the bearer to the principal plus interest at the maturity date.

Common Reference   

A reference made up from some of the details of a foreign exchange or loan/deposit deal, or the Forward Rate Agreement. Its primary purpose is to facilitate nostro reconciliation.

Confirmation   

Written advice from one counterparty to the other in which the main facts of the deal are confirmed. It may or may not include payment instructions.

Contract Amount   

The currency and the amount of the agreement.

Contract Date   

Date on which the contract is agreed between the parties.

Contract Type   

The details which specify the type of contract entered into by two parties.

Counterparty   

The corresponding party to a transaction.

Drawdown   

The actual payment of a loan to the Borrower. This may occur at a later date than the arrangement of the loan.

Eurocurrency   

A deposit account in any major market currency where the owner of the funds is a non-resident of the country of the currency.

Exchange Rate   

The price at which one currency can be bought with another currency.

Foreign Exchange Deal   

A contract to exchange one currency for another at an agreed price for settlement on an agreed date.

Foreign Exchange Swap Deal   

A simultaneous spot sale and forward purchase, or a simultaneous spot purchase and forward sale of currencies.

Forex   

Foreign Exchange

Forward Deal   

1. Simultaneous purchase and sale of one currency for different forward value dates.$ATT$2. 2.Simultaneous deposit and loan of one currency for different maturity dates. This effectively provides a deposit to commence on a future date.

Forward Rate Agreement (FRA)   

A contract between parties which may be seeking to protect themselves against a forward interest rate movement, in the currency of the agreement for the agreed amount, for a specified period, at an agreed interest rate.

FRABBA   

The British Bankers' Association's (B.B.A.) recommended terms and conditions for Forward Rate Agreements.

Interest Amount   

The amount of interest.

Interest Rate   

The percentage rate quoted and/or charged for the use of money.

Interest Settlement   

The instruction for the disbursement of the payment of interest.

LIBOR   

London Interbank Offered Rate. The rate at which principal London banks offer to lend currency to one another at a given instant. Often used as a base rate for fixing interest rate on bank loans, for example, 'Interest to be fixed at 1 1/4% per annum over LIBOR'.

Maturity Date   

The date agreed for settlement of a foreign exchange contract. The date agreed upon which a fixed loan/deposit matures.

Notional Amount   

The amount underlying a conditional transaction.

Option Contract   

An agreement that gives the buyer the right, through exercise, to require the seller to perform certain specified obligations.

Presentation Period   

A period of notice required to terminate a deposit.

Rollover   

Renewal of a loan/deposit at maturity. The new loan/deposit may be for the same amount or for a greater or lesser amount than the original.

Spot Deal   

A deal for currency for delivery one to five business days (normally two) from the contract date.

Value Date and Amount Bought   

The maturity date of a foreign exchange deal and the amount the Sender is buying.

Value Date and Amount Sold   

The maturity date of the foreign exchange deal and the amount the Sender is selling.