FX Products

Spot Contract

A Spot Contract is the simplest and most common type of foreign exchange transaction.
It allows you to buy or sell currency and pay within the next two days.

Spot contracts are ideal for:

• Companies paying overseas supplier and service invoices

• Companies importing goods and needing to pay for international goods and services

• Companies transferring funds between related entities for an immediate commercial purpose (e.g. following receipt of foreign currency income)

• Individuals needing to pay deposits and final settlements when buying international property

* Please note that EMM does not hold client balances or provide payment accounts. All currency transactions must be linked to a specific payment instruction. Once you’ve booked a spot trade, you’ll need to provide beneficiary details promptly so that the bought funds can be sent out as soon as the settlement is received. EMM will not retain funds without a confirmed payment order.

Forward Contract

A Forward Contract lets you lock in an exchange rate today for a payment you plan to make in the future (up to 12 months ahead).

Forward contracts are ideal for:

• Companies that know they need to pay a specific international invoice in a few months time; and want to fix the rate now to protect their own profit margins.

• Individuals in the process of buying an international property, who have already paid the deposit and are committed to completing; But do not need to send the final settlement for a few months and therefore want some security of what the property will cost in their own currency, when they go to complete.

Essentially, forward contracts are a way to protect you against potential exchange rate movements and allows you to budget and hedge currency exposure.

When you book a Forward Contract:

• You will need to send a 5% deposit to hold the rate.

• This deposit is not held as “relevant funds” under the Payment Services Regulations, as it is used to protect EMM from non-settlement of the FX transaction. These funds are therefore not safeguarded, in the same way as other payments you send to us. (See below for "Information on How Your Funds Are Protected" to show how your settlement of fx transactions and payments waiting to be released are protected)

• You may need to send additional "top-up margin" during that period to make sure that EMM's losses do not exceed the 5% deposit amount. This will only be requested if the market moves out of favour during the period between confirming an fx transaction and settlement date. Similar to the above, "top-up margin" is for EMM's protection of non-settlement of the fx transaction and therefore not safeguarded. Please contact the team if you want to understand the circumstances of when additional margin would be requested.

• This deposit and any top-up margin are not fees. When you settle the transaction on the agreed settlement date, you simply pay the remaining balance, and your deposit is used in the final settlement of the transaction.

• If you cancel a trade, any mark to market losses will be deducted from your deposit and top-up margin if requested

Forward Contracts are available only where there is a clear underlying payment obligation or commercial exposure.

Example:
You are sent an invoice that needs to be paid in 6 months time. You can fix the rate now so that you know what the cost of the invoice will be when you need to settle the invoice in 6 months time.

* As with a Spot Contract. Proceeds of a settled forward contract must be accompanied by a payment order before or promptly after settlement. We do not allow you to hold funds as a balance or use the bought funds as a payment account. Evidence of a commercial or business purpose will be required when booking any Forward Contract. Forward Contracts cannot be used for speculative purposes.

Information on How Your Funds Are Protected

E-Money Markets Ltd (“EMM”) safeguards all relevant customer funds in segregated accounts, separate from the company’s own capital and liquidity resources. Any funds received in connection with an FX transaction where the settlement date is not due on the same day, or where the payment date for the purchased currency is more than one business day in the future, are treated as relevant funds and are fully segregated in accordance with regulatory requirements. As mentioned above, as depsoits and 'top-up margin' are for EMM's protection against your non-settlement of an fx forward contract; these funds are not safeguarded.

EMM is not covered by the Financial Services Compensation Scheme (FSCS). Instead, customer funds are protected through the safeguarding regime, which ensures that, in the unlikely event of EMM’s insolvency, safeguarded funds are kept separate and used solely to reimburse customers.  Safeguarded funds may be subject to insolvency practitioner costs.