pricing - page 11
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So what is the answer to these questions ?
And the other is whether this answer can be used in the construction of the model ?
We'll put the universality aside for now. We need to sort out the answer for at least one currency.
What do you think?
(I have formulated good questions, you might say leading ones, my resources are limited, I am tired of this and need a break, so I leave it to you)
No problem, have a rest. But it's too early for me to redirect this question. It's not like I said I knew everything about this mechanism.
That's why I hope to hear it from you. You have already criticized those present for their ignorance enough. So now it seems that we can get to the heart of the matter. You have made your questions very clear.
No problem, have a rest. But it's too early for me to redirect this question. It's not like I said I knew everything about this mechanism.
That's why I hope to hear it from you. You have already criticized those present for their ignorance enough. So now it seems that we can get to the heart of the matter. You've made your questions very clear.
Well, were they "questions"? It was just rhetorical philosophy. Here are the real questions, the answers to which may lead straight to a truthful model:
1). the global volume of international trade = about 500 billion per MONTH. Forex turnover = 3 trillion a day. What are they trading there, these bankers on forex ?
2). Why do bankers need swaps on forex ?
3). Who (which departments of the bank) gives orders to the foreign exchange dealer to buy or sell currency? What is each department's share ? Which one is more important? Who can the currency dealer ignore and who not?
4). What is the difference between a bank's "currency position" and a trader's "currency position" on retail forex ?
5). Why is the delivery of currency on forex spot only on the 3rd day? Can't it be faster? If not, why not?
6). Who exactly in the bank sets the boundaries of the currency corridor in which the bank's forex dealer can trade?
Hope it was a pleasant holiday. :-)
Will there be a sequel? Or will all these questions remain unanswered?
well, were they "questions"? That was just rhetorical philosophy. But here are the real questions, the answers to which can lead straight to a true model:
1). the global volume of international trade = about 500 billion a MONTH. Forex turnover = 3 trillion a day. What are they trading there, these bankers on forex ?
2). Why do bankers need swaps on forex ?
3). Who (which departments of the bank) gives orders to the foreign exchange officer to buy or sell currency? What is the share of each ? Which one is more important ? Who can the currency dealer ignore and who not ?
4). What is the difference between a bank's "currency position" and a trader's "currency position" on retail forex ?
5). Why is the delivery of currency on forex spot only on the 3rd day? Can't it be faster? If not, why not?
6). Who exactly at the bank sets the boundaries of the currency corridor in which the bank's forex dealer can trade?
1. Currency, and other contracts ... There are times when even a 5 lot deal in retail can move the price.
2. Swaps - only on swap contacts, appeared in the U.S. (bank by law obliged to have on balance a minimum of funds for the reporting period, decided to cheat, the bank having more cash - can pass to another bank (which checks) for X days under a small percentage for the day user of the dough).
3. Basically, currency department works with the credit department, if the bank decides to provide a small currency loan, the head of the credit department makes a decision to give dough, buy currency department. In the same way, the foreign exchange department keeps an eye on their own currency (and sells it when necessary).
4. in the volume (see also item 1).
5. So decided.
6. The head of the currency department.
P.s. The decision is also taken on the basis of the official position of the Central Bank (if for example in our country or in another country where the regulator establishes the framework).
1. Currency, and other contracts ... there are times when even in the same retail trade a 5 lot deal can move the price.
2. Swaps - only on swap contacts, appeared in the U.S. (bank by law obliged to have on balance a minimum of funds for the reporting period, decided to cheat, the bank having more cash - can pass to another bank (which checks) for X days for a small percentage for the day user of the dough).
3. Basically, currency department works with the credit department, if the bank decides to provide a small currency loan, the head of the credit department makes a decision to give dough, buy currency department. In the same way, the foreign exchange department keeps an eye on their own currency (and sells it when necessary).
4. in the volume (see also item 1).
5. So decided.
6. The head of the currency department.
P.s. 6 is also the decision to take into account the official position of the Central Bank (if for example in our country or in another country where the regulator establishes the framework).
1. Obviously, "currency". The question, of course, is WHY and WHO? About the shift - nonsense.
2. Wrong.
3. Wrong.
4. Wrong.
http://lib.mabico.ru/303.html
CURRENCY POSITION
(Bank currency position is the ratio between the bank's claims and liabilities in foreign currencies. A distinction is made between a closed foreign exchange position (if it is equal) and an open position (if the amounts of currency purchased and sold do not match). If the liabilities exceed the claims, the Currency position is considered short; if the claims to buy currency exceed the liabilities to sell it, the Currency position is long. The size of the Currency position depends on the bank's goals: to secure the client's international settlements; to diversify its currency holdings; to speculate for exchange rate differences. Maintaining a long or short Currency position for several days or weeks by the bank is considered currency speculation (see Currency speculation). An open Currency position entails currency risk (see Currency Risks). As the Currency position changes continuously throughout the day, a long Currency position becomes short and vice versa. The use of a computer enables banks to continuously monitor the Currency position by means of automated processing of currency transactions and to obtain real-time data on the ratio of claims and liabilities for each currency. The bank evaluates the currency risk contained in the Currency position and the possible results in case of closing it at the exchange rate of the day. This assessment is complicated by the fact that the Currency position is formed in the course of not only cash(spot) but also futures currency transactions executed at different rates at different times. In case of a long foreign exchange position, the bank decreases the quotation of the respective currency in order to attract buyers; in case of a short foreign exchange position, it may increase the quotation to attract sellers of this currency. To assess the possible result of closing the foreign exchange position, the amounts of the long and short foreign exchange position are translated into the national currency, or firstly into a foreign currency (for example, dollars), and then into the national currency. By the end of the business day, banks close the open Currency positions. In a number of countries, the state limits the open Currency position in order to avoid possible bankruptcies.5. Incorrect.
6. Incorrect. Incorrect.
So there is nothing to talk about at the moment. Except to simplify the questions: what are passive and active?
2). Why do bankers need to swap forex ?
5). Why is currency delivery on the forex spot only on the 3rd day ? Can't it be faster ? If not, why not ?
I would like to add 1 more question:
- Why the triple swap on Wednesday night and not Friday night and Monday night?
I would like to add one more question:
- why the triple swap on Wednesday night and not Friday night and Monday night?
because the value date (delivery of the transaction) on the SPOT terms is postponed from Friday to Monday, i.e. + 2 days more (Saturday and Sunday).
because the value date (delivery of the transaction) on the SPOT terms is moved from Friday to Monday, i.e. + 2 days more (Saturday and Sunday)
Well, why is the swap single from Thursday to Friday?