Giving the latest banking product mix is no doubt important. But the implementation of these in the right manner is just as important.
As for the currencies, options could be dealt for interest rates. These instruments are commonly used for hedging or pure trading. They have become one of the most important and flexible hedging instruments in the money market.

 

Interest Rate Cap

It is a call option to protect from an interest rate rise.

 

Interest Rate Floor

It is a put option to protect from a decline in interest rates.

 

Interest Rate Collar

It allows the company to fix an interest rate within a band, so it combines the purchase of a cap and the sale of a floor. The cap protects from the upside, the floor reduces the protection cost by limiting the company to a minimum borrowing rate, in case of a fall in interest rates.

 

Interest Rate Corridor

It is the buying of a cap at one strike price and the sell of another cap at higher price to partially offset the premium paid.

 

Swaptions

It is an interest rate option giving the right to enter into an interest rate swap. The cost is cheaper than a cap, and will be switched to an IRS if rates are higher.

Description

• Ideal solutions for hedging and pure trading
• One of the most widely used solutions
• Solutions that are chiefly dedicated to meet varied market conditions
• Real-time inputs and industry knowledge to keep pace with ongoing changes