Another country at an agreed rate with settlements carried out on a specific date.

In a legal sense, conversion transactions are transactions for the purchase and sale of currencies. Regarding conversion transactions in English language The stable term Foreign Exchange Operations (Forex or FX for short) has been adopted.

The main difference between conversion operations and credit and deposit operations is that the former do not extend in time, that is, they are carried out at some point in time, whereas deposit operations have a duration in time and different urgency.

By timing conversion operations are divided into two groups:

1. Spot operations, or current conversion operations;

2. Forward or urgent conversion operations.

In world practice it is accepted that current conversion operations according to major world currency pairs are carried out on spot terms, that is, with a value date on the 2nd business day after the day the transaction was concluded. international market current conversion transactions is called the spot market. The terms of spot settlements are quite convenient for the counterparties of the transaction: during the current and next day after its conclusion, it is convenient to process the necessary documentation and issue payment orders for making transfers. In Russia, as well as in a number of developing countries, a different practice has developed for conducting settlements on conversion transactions. Current (or the term cash) transactions on the dollar/ruble market are concluded with a value date of “today”, “tomorrow” and only occasionally on spot. Transactions with a value date today can be concluded throughout the working day, since it is possible to carry out transactions until late non-cash transfers in dollars (in the USA, due to the eight-hour time difference, the cutoff time falls on late evening in Moscow) and in rubles (due to the fact that Cash Settlement Centers (CSC) of the Central Bank of the Russian Federation accept payment orders until 21:00 Moscow time) .

Forward (urgent) conversion operations(FX forward operations or FWD for short) are currency exchange transactions at a pre-agreed rate that are concluded today, but the value date (that is, the execution of the contract) is postponed for a certain period in the future.

Forward transactions are divided into two types:

1. Outright transactions- a single conversion transaction with a value date different from the spot date. They account for about 17% of forward transactions;

2. Currency swap transactions(FX swap) - they make up 83%, that is, the majority of forward transactions.

Literature

• D. Yu. Piskulov. Theory and practice of currency dealing. Educational edition.

Wikimedia Foundation.

2010.

See what “Conversion operations” are in other dictionaries: Operations related to the conversion of one security into another. See also: Bank operations Exchange Traded Funds Convertible securities Finam Financial Dictionary...

Financial Dictionary CONVERSION OPERATIONS - 1) exchange (purchase and sale) of currencies; carried out by banks and other credit financial institutions , commercial and industrial corporations, individuals through the mediation of the foreign exchange market (transactions between banks and clients and interbank transactions), as well as...

Legal encyclopedia 1) exchange (purchase and sale) of currencies; carried out by banks and other credit and financial institutions, commercial and industrial corporations, individuals through the mediation of the foreign exchange market (transactions between banks and clients and interbank transactions), etc....

Financial Dictionary - Encyclopedic Dictionary of Economics and Law currency operations exchange (purchase and sale) of currencies; carried out by banks, other credit financial institutions , trading and industrial companies, individuals at foreign exchange market rates. Banks carry out Co. when making your calculations...

Foreign economic explanatory dictionary conversion operations - exchange and purchase and sale of currencies carried out by banks, commercial and industrial corporations, individuals... Dictionary economic terms - operations related to the conversion of one security into another. For example, operations to convert short-term liabilities into long-term...

Legal dictionary Transactions for the purchase and sale of cash and non-cash foreign currency for cash and non-cash rubles. Dictionary of business terms. Akademik.ru. 2001 ...

Dictionary of business terms

Direct conversion transactions are transactions involving the exchange of certain amounts of the currency of one country for the currency of another, followed by settlement of the transaction using the received currency on a certain date. As a rule, conversion operations are carried out by banks, which become intermediaries between companies conducting foreign trade activities and their foreign partners. It is worth understanding that a conversion operation is not at all a currency exchange, which we are used to seeing in kiosks. This special kind financial transactions, the essence of which is not so much in the exchange itself, but in the further use of the currency that appeared as a result of the exchange on the client’s account.

Conversion operations in international practice

Interesting fact: in international practice, conversion operations are called Foreign Exchange Operations, or Forex for short. And this is not a coincidence: indeed, today the global over-the-counter Forex market, known for its speculative operations, initially served precisely conversion purposes. This best reflects the essence of these transactions: counterparties from different countries with accounts in different currencies, they need to quickly carry out a transaction, for which they should exchange money for foreign exchange market to bring them to a common denominator.

It was no coincidence that the definition of conversion transactions indicated that transactions were made on a specific date. The delivery time of money to the account, or, as it is called in the professional financial environment, the value date, is the most important element conversion operation, since the value date determines exactly when the money in the required currency will arrive in the desired account.

Depending on the value date, conversion transactions can be:

• spot, that is, instant or current. Executed at the current rate relevant at the time of the transaction;

• forward or urgent. They are carried out at the forward rate, with a deferred value date. Today they are widely used for speculation, since the most common forward conversion operation is currency swap, that is, a combination of two differently directed operations, separated in time, in one operation. For example, this could be buying a dollar for a euro with a deferred sale of a dollar and receiving euros.

In international practice, “Spot” value terms imply a value date on the second banking day after the transaction. This is done so that market participants can prepare everything after concluding the contract. Required documents to carry out the transaction. In Russia and countries former USSR This practice has not taken root and conversion operations are carried out differently.

Conversion operations in Russian: what do Russian banks offer?

The practice of currency transactions in Russia is due to the time difference with the United States, as well as the traditional love of domestic bankers for the cash method of making transactions. Today, Russian banks offer conversion transactions on the dollar/ruble and euro/ruble currency pairs with value on the current banking day -Tod or on the next banking day -Tom. Spot terms are not offered.

Postings with a value date of “today” for the dollar/ruble and euro/ruble currency pairs are carried out throughout the business day, since most Russian banks accept payment orders for posting until 18:00, and sometimes until 21:00 Moscow time. The eight-hour time difference with the United States allows Russian transactions to slip through the window before opening banking day in America. Accordingly, at the time of the start of postings in the United States, all Russian conversion transactions are already awaiting processing.

It is worth noting that banks make transactions at their own internal rate, and not at the current market spot rate, as is common in international practice. Because of this, there may be some deviations in the amounts received. Different banks have different rules for carrying out conversion transactions. Most often, the rate for major currency pairs is set once a day, based on the closing rate of the spot market of the previous day. In some advanced banks (which is not so common), adjustments may be made during the working day. Some banks offer special service conditions for large clients, including preferential currency exchange rates.

Forward conversion operations are also carried out - both unilateral and with a subsequent reverse operation (swap). As a rule, banks offer forward transactions only through telephone transactions, and not information systems or software products“client-bank” to simplify the transaction. This is due to the fact that such transactions pose additional risk to banks, therefore, before concluding such transactions, the client must either obtain a special risk sublimit for urgent transactions from the bank, or provide security for the transaction.

What specific conversion operations are encountered in practice?

The most common operations carried out by Russian banks are:

• purchase of foreign currency using client funds placed on a ruble account, followed by crediting the currency to the specified foreign currency account;

• purchase national currency for client funds placed on foreign currency account, followed by crediting rubles to the specified foreign currency account;

• carrying out a purchase and sale transaction using funds in one currency with the subsequent crediting of the amount to an account in another currency.

It is worth noting that for conversion operations the range of currencies offered is much wider. If only the world's most popular currencies (dollar, euro, pound) can be obtained in cash, then virtually all freely traded on the global over-the-counter foreign exchange market (those traded as instruments on the Forex market), as well as some conditional ones, can be used for conversions. - free (not prohibited by the governments of these countries for purchase and sale).

The exchange of agreed amounts of the currency of one country for the currency of another country at an agreed rate with settlements carried out on a certain date.

In a legal sense, conversion transactions are transactions for the purchase and sale of currencies.

The main difference between conversion operations and credit-deposit operations is that the former do not extend in time, that is, they are carried out at a certain point in time, while deposit operations have a duration in time and different urgency.

Types of conversion transactions[ | ]

By timing conversion operations are divided into two groups:

1. Spot operations, or current conversion operations;
2. Forward operations, or urgent conversion operations.

Current conversion operations[ | ]

In world practice, it is accepted that current conversion transactions on the world's major currency pairs are carried out on spot terms, that is, with a value date on the 2nd business day after the day the transaction was concluded. The international market for current conversion transactions is called the spot market. The terms of spot settlements are quite convenient for the counterparties of the transaction: during the current and next day after its conclusion, it is convenient to process the necessary documentation and issue payment orders for making transfers.

Urgent conversion operations[ | ]

Forward (urgent) conversion operations (English FX forward operations or abbreviated FWD) are currency exchange transactions at a pre-agreed rate that are concluded today, but the value date (that is, execution of the contract) is postponed for a certain period in the future.

Forward transactions are divided into two types:

1. Outright is a single conversion transaction with a value date different from the spot date. They account for about 17% of forward transactions;
2. Currency swap (FX swap) - they make up 83%, that is, the majority of forward transactions.

In Russia [ | ]

In Russia, as well as in a number of developing countries, a different practice has developed for conducting settlements on conversion transactions. Current (or the term is used - cash) transactions in the foreign exchange market are concluded with a value date of “today”, “tomorrow” (tomorrow) and only occasionally on spot. Transactions with a value date today can be concluded throughout the working day, since it is possible to carry out transactions until late

Forex Kindergarten / Chapter 4. Types of conversion operations

The concept of the type of conversion operation on Forex is closely intertwined with terminology financial instruments. In financial markets, which in addition to Forex also include gold market, credit market And stocks and bods market, under financial instruments understand the ways of carrying out financial transactions. Next, we will consider exclusively financial instruments related to the international Forex currency market. Rest financial markets and their financial instruments are beyond the scope of the information portal and will not be considered further. Types of conversion transactions (financial instruments related to Forex) are shown in the figure.

Conversion operation is a transaction between Forex participants to exchange an agreed amount of currency of one country for the currency of another country on a certain date at an established quotation. Conversion operations on Forex are different value date, i.e. the date of currency delivery relative to the date of the currency purchase/sale transaction. Based on this criterion, conversion operations can be divided into two categories, as shown in the figure:

• operations like spot(spot) or current conversion operations;
• forward(forward) conversion operations.

The largest volume of Forex transactions is occupied by spot type transactions. It is the Forex work on these operations that is discussed on the information portal. In international practice, it is accepted that the value date for spot transactions is the 2nd business day after the conclusion of the transaction. Such conditions are quite convenient for counterparties (participants) of the transaction, since during the current and next business day it is possible to process all the necessary documentation and issue payment documents. The market where currencies are exchanged at current (spot) quotes is called spot market(spot market).

It is worth mentioning that this principle of mutual settlements for spot transactions is valid only for large participants in the international foreign exchange market. For private investors (clients of retail brokerage houses) trading Forex via the Internet, a transaction is completed instantly at the click of a mouse button. In such transactions, the value date as such loses its meaning - the client’s account always reflects Current state his work on Forex.

Forward conversion transactions include forwards(forwards), futures(futures), options(options) and swaps(swaps). They are also called derivative financial instruments(derivatives). Such financial instruments were specially developed for real business, as they help reduce possible risks from changes in quotes on the international foreign exchange market in the future. For a private investor who wants to make money on Forex via the Internet, such financial instruments are of little importance. However, they will be considered to understand the overall picture of the types of conversion transactions.

Forwards(forwards) or as they are also called - forward contracts, are concluded between the parties to a transaction on the condition of exchanging a certain amount of currency at pre-agreed quotes on a predetermined day (value date). The transaction will be completed regardless of what current (spot) prices will be on the Forex currency market on the value date. The transaction amount, quotes and value date can be anything - it all depends on the agreement reached by the counterparties.

Forex forward contracts can be useful, for example when Russian company plans to purchase equipment for US dollars abroad. Let’s imagine that such a company today does not have a sufficient number of Money to complete the transaction, but expects the receipt of funds in rubles to the current account within a month. She also expects change exchange rates in an unfavorable direction for oneself, i.e. The dollar is expected to rise in price. In this case, it makes sense to enter into a forward contract with a bank to purchase the required amount of US dollars with a value date of one month at quotes favorable to the company. Naturally, the bank may not agree to such conditions if it also expects the US dollar to rise in price, and finding a counterparty for such a transaction can be a difficult task.

Forward contracts, on the one hand, minimize risks, but on the other hand, they can become a source of lost profits. So, if in the previous example, in a month the US dollar does not rise in price, but falls in price, then the company will have lost profits. After all, the company could pay fewer rubles for the equipment.

Futures(futures), unlike forward contracts, have standard maturities (valuation) and fixed sizes amount of currency. This feature allows them to be sold like ordinary securities. There is a separate market for Forex futures trading - futures market(futures market). The average duration of futures trading on such a market is approximately 3 months.

Options(options) are similar to futures, but weaken the obligations of one of the participants in the transaction. So, if when purchasing a futures you are obliged to carry out a transaction according to the agreed terms of the transaction, then in the case of an option, you can refuse to carry out the transaction at your discretion. Forex options are also traded on separate market – options market(options market).

Swaps(swaps) is a type of conversion transaction in which the parties enter into a transaction for the purchase/sale of a certain amount of currency with the obligation to complete a reverse transaction after a certain period of time. For example, a company buys 1,000 US dollars for rubles at the current (spot) quote from a bank with the obligation to sell the bank 1,000 US dollars for rubles in a month at the current (spot) quotes that will be on Forex in a month. Swaps are non-standardized contracts, so they are not traded on a separate market.

Of all the described conversion operations (financial instruments) for a private investor who wants to make money on Forex via the Internet, operations like spot(spot) on spot market(spot market). It is the Forex spot market that is discussed in detail in subsequent chapters of the Forex Arena information portal.

The bank client has the right to agree on the possibility of carrying out conversion operations to convert certain amounts from one currency to another. Usually in Russian Federation such operations are carried out upon fulfillment of the terms of foreign trade contracts. Conversion transactions are foreign exchange transactions carried out on the client's account of a credit institution at an agreed rate on a certain date.

Conversion transactions on customer accounts

In accordance with the legislation of the Russian Federation on currency control, residents have the right to accumulate in accounts and conduct transactions in any foreign currency using conversion transactions at an agreed rate.

The Bank of Russia Instruction dated June 4, 2012 identifies the following types of conversion transactions:

• sale by a resident of foreign currency for rubles;
• acquisition by a resident of foreign currency for rubles;
• acquisition (sale) by a resident of one foreign currency for another foreign currency;
• acquisition by a non-resident of the currency of the Russian Federation for foreign currency;
• sale by a non-resident of the currency of the Russian Federation for foreign currency.

There are two main types of urgency for such operations:

• spot (current). Executed at the current (current) exchange rate. The value date in them is usually the second banking day after the transaction;
• forward (urgent). They are carried out at the forward rate with a deferred value date.

Typically, conversion operations are carried out for the purposes of foreign economic activity of organizations and related bank transactions.

In practice, a conversion operation may look like this: an organization has a ruble account with a credit institution, and a foreign trade contract provides for payment in cash in another currency (for example, euros). The account is credited in rubles as a result of a previously carried out conversion operation to transfer from euros to rubles.

The opposite situation: for example, the client has a dollar account. Based on the terms of the contract, euros should be transferred. Based on the order, the bank will conduct a conversion operation at the agreed rate and make a transfer in euros.

The procedure for conducting conversion transactions on customer accounts

Different credit institutions have different (i.e., their own) rules for conducting conversion transactions. The legislation of the Russian Federation does not contain unified rules in this area.

Usually, credit organizations approve such a procedure in an internal document. The client, by sending a corresponding application to the bank, adheres to the conditions approved by the bank for conducting conversion transactions on client accounts.

Specific conditions for the transaction (for example, value date, exchange rate on the date of the transaction), as a rule, are reflected in the client’s order.

The so-called “value date” is one of the most important criteria for this operation. The date of receipt (transfer) of funds in the required currency will depend on the value date.

Forward transactions may require the introduction of collateral for their completion, because they carry certain risks for the banks implementing them.

For the execution of a conversion operation, the bank charges a fee determined by agreement with the client.