A swap is a combination of a spot and a forward transaction. With a foreign exchange swap, you are exchanging different currencies with the bank for an agreed upon period of time. You agree to buy or sell a certain amount of a foreign currency from or to the bank, and at a later date to sell or buy back the same amount to or from the bank, at predefined exchange rates. For example, you could convert a surplus in one foreign currency into another, or change the date of a previously agreed upon forward.
The FX Roll is a variant of an FX Swap. The FX Roll allows you to extend or shorten the settlements date of an open FX Forward position. Like an FX Swap, an FX Roll has two underlying transactions that are executed simultaneously. One transaction to reverse the previously executed FX forward transaction on the original settlements date and one transaction to realize settlement on the new desired date.
With a fx swap you are less susceptible to market rate fluctuations. You will have more certainty about the amount that you will need to pay or receive in the future.
This product is particularly suited for managing settlement risk if there is a delay in incoming cashflows or if you need to pay earlier than anticipated. FX Roll transactions can be applied to open FX Forward contracts and are only available via the Franx platform. Within the Franx platform the trade you want to change the settlement date for can be selected. Franx will display the real-time rates that are applicable for the new settlement date.
