TL;DR: A budget rate (see glossary) is a hard commercial constraint, not a forecast. Once your plan is priced and board-approved, every unhedged transaction that settles at a worse spot rate increases costs, reduces gross margin, and introduces variance that undermines forecast accuracy and complicates board reporting. Bound is an FCA-regulated FX hedging platform. Customers choose one of three hedging strategies, Bound tracks the exposure and executes against the strategy chosen, and the fee is shown on screen before you confirm. Exposure can be entered directly in the platform or calculated from connected data sources. Five approaches are covered: doing nothing, partial FX forward cover, full FX forward cover, layered averaging, and order-based ranging. Each involves a different trade-off: what you pay in spread (see glossary), how much upside you give up by locking in a rate, or how much exposure you leave open.
Growth-stage finance teams often spend significant time modelling a budget rate, only to treat execution as a decision made at the point of payment. By then, the exposure may have been sitting unprotected for months, and a rate move the business had no mechanism to respond to has already eaten into gross margin. This piece is not about whether to hedge. It is about keeping a commercial commitment you have already made, and what each approach actually costs you.
The commitment you've already made
When you set a budget rate at the start of the fiscal year, you are not making a prediction about where a currency pair will trade over the next twelve months. You are setting the baseline around which your entire business plan is built: product pricing, supplier cost modelling, gross margin targets, and the EBITDA (see glossary) figure that goes to the board. That rate is already embedded in commitments you cannot easily unwind.
The instruments that defend it
Three strategies can defend a budget rate, and they work differently.
An FX forward contract (see glossary) locks in a rate for a defined amount at a defined future date, removing rate uncertainty between agreement and settlement. That is the most direct instrument for protecting a specific committed payment. An FX forward delivers that protection only where the rate booked is at or better than the budget assumption, if the rate available at booking is worse than budget rate, the contract locks in that shortfall rather than eliminating it.
A layered averaging programme (see glossary) spreads the hedging of an exposure across multiple execution points over time, producing an average achieved rate rather than a single locked-in rate, which suits businesses whose exposure arises from recurring operating costs rather than discrete transactions.
An order-based ranging strategy (see glossary) places a stop and a limit together: the stop sets the worst rate you are willing to accept and the limit sets the target rate, so the executed rate falls within a band you have defined in advance. Each approach is covered in detail below.
Why it's harder to change than other assumptions
The budget rate is harder to change because it is embedded in commercial decisions made across the business. Product pricing, margin expectations, supplier economics and the board-approved EBITDA plan may all have been set using that rate.
When FX moves materially against the business, changing the budget rate therefore does more than update a forecasting assumption. It exposes the consequences of decisions already made against the original rate. Pricing may no longer support expected margins, foreign-currency supplier arrangements may need to be reconsidered, and EBITDA will need to be reforecast. The rate revision records the change in circumstances; it cannot undo the commercial impact of the FX move.
What happens when spot moves against your budget rate
The margin impact in concrete terms
GBP/USD traded in a 52-week range from approximately 1.30 to 1.39 in the twelve months to August 2026, a band of roughly 6.9% measured from the low. GBP/EUR moved between approximately 1.13 and 1.18 over the same period, a band of roughly 4.4%. Major pairs commonly move around 1% in a day and 5% to 10% over a period of months, which is why a budget assumption set once a year can be a long way from the market by the time a payment falls due.
Translate that into a concrete example. A UK importer with $1M of USD-denominated supplier costs, budgeted at a GBP/USD rate of 1.32, faces the following outcome if the rate moves to 1.254, a 5% adverse move against sterling:
Cost at budget rate: £757,576
Cost at adverse spot: £797,448
Unhedged loss: approximately £39,900
That £39,900 does not sit in a separate FX line that can be explained away. It increases the cost base and reduces the margin the board approved.
How quickly exposure becomes visible
Traditional FX reporting often identifies changes in exposure only after the point at which they could have been acted on. If exposures are tracked in spreadsheets updated weekly or at month-end, movements that occur between reporting cycles remain unseen until the next reconciliation. By then, rates may have moved materially and the opportunity to respond at the earlier level has passed.
Bound connects to your accounting software, payment platforms and bank feeds to calculate FX exposure from live invoices and purchase orders automatically, so the exposure figure reflects your current payables rather than a periodic export.
When the board starts asking questions
A board member might ask "what is our currency exposure this quarter, and what have we done about it?" Both answers need to come from a live, running system, not something the finance team has to reconstruct from spreadsheets and old broker paperwork under time pressure. FX variance that erodes gross margin without a systematic explanation signals a gap in financial governance, and boards and investors notice it.
That's what an integrated FX hedging platform gives you on both counts. Exposure is calculated automatically from live invoice and purchase order data pulled straight from your accounting software, so the number itself is always current. And because every trade executes against parameters the finance team set in advance, not a judgement call made under time pressure, the action taken is logged automatically too, fee disclosed before each trade confirms, with the full record sitting in one place, the platform, rather than scattered across email threads and broker confirmations. Both answers are ready the moment that board question comes up.
Before/after: Ad-hoc FX management vs. systematic hedging
Dimension | Ad-hoc, manual approach | Integrated, automated platform |
|---|---|---|
Exposure tracking | Periodic spreadsheet export | Calculated automatically from connected accounting, payment and banking data |
Trade execution | Manual broker call to book each forward individually, with no automated prompt or trigger to ensure it happens | Booked the trades against the strategy you chose |
Fee visibility | Rate quoted inclusive of markup | Spread disclosed on screen before confirmation |
Amendment process | Usually a broker call, with the fee agreed at the time | Date or amount changed in platform with fee shown upfront |
Reconciliation | Manual reconciliation from broker confirmations | Trade records write back automatically via your accounting software integration |
Board reporting | Manual reporting from broker statements | Statements, open and settled trades and mark-to-market (see glossary) positions downloadable as PDF or CSV |
Your options for defending the rate
Before examining each approach in detail, the table below summarises the trade-offs so you can locate your situation quickly.
Hedging approach | Protection level | Upside retained | Best suited for |
|---|---|---|---|
Do nothing | 0% | 100% | FX exposure is too small to affect margin, or all currency costs can be passed directly to customers through pricing |
Full forward cover | 100% | 0% | Thin gross margins, importers, exporters, foreign-currency lending |
Partial cover | The share you cover | The share left open | Moderate forecast confidence, amounts likely to change |
Layered (averaging) | 100% over time | Smoothed average rate | Exposure arising from operating expenses, high or no gross margin |
Ranging | Stop rate (floor) | Up to limit rate | A budget rate to protect, without locking in today |
For a detailed treatment of how to size coverage by time horizon, see our guide on how much of your FX exposure you should hedge.
Do nothing and accept the variance
Remaining entirely unhedged is a choice, and it is occasionally the right one. Every day that exposure sits unprotected, you are implicitly accepting that spot will not move far enough against you to matter. For businesses with meaningful recurring transactional exposure, that leaves the full amount open against a target the board has already signed off.
Doing nothing is defensible when at least one of the following conditions holds: the foreign currency exposure is genuinely immaterial to gross margin, a large proportion of FX fluctuations can be passed directly to customers through pricing, which typically works best where competitors carry similar exposure and adjust prices in the same direction, or the business has naturally offsetting revenues and costs in the same currency.
Hommel and Piquard (2025) find that currency risk is highly concentrated: half of firms have negligible FX exposure, but for the most exposed firms, exchange rates explain 12% (ninth decile) to 28% (tenth decile) of cash-flow variance on average. Outside these conditions, carrying unhedged transactional exposure (see glossary) against a board-approved budget rate leaves the EBITDA target exposed to rate movements without an offsetting position.
Full forward cover: Lock it all in
An FX forward contract locks the exchange rate for a specified notional amount (see glossary) and settlement date (see glossary), so the rate you apply to that transaction at settlement is the rate you agreed months earlier, regardless of where spot trades on the day. FX forward contracts are typically used as a standard corporate instrument for managing transactional foreign exchange risk across import and export cycles, and full forward cover removes rate risk entirely for the covered portion.
Bound's Forwarding strategy executes this at scale. The platform locks the rate and discloses the spread (see glossary) before you confirm. If a payment date moves, you can amend the settlement date in the platform, with the cost shown before any change is confirmed. If you need to convert part of the amount before the original settlement date, you can bring that portion forward to an earlier date without cancelling the full contract, that is a drawdown (see glossary). You can also set a rule once and let Bound book the trades against it rather than placing each one yourself.
Full forward cover also eliminates any benefit if the spot rate (see glossary) moves in your favour after you book a forward. If GBP strengthens 4% after you lock a GBP/USD forward, you settle at the booked rate and miss the improvement. That is the point. Hedging is not a mechanism for making money on currency, it is a mechanism for not losing it. The objective is to arrive at the rate the business planned around, not to outperform the market. Missing a favourable move is not a failure of the hedge, it is evidence that the hedge did what it was designed to do.
The spread is the cost of that certainty: Bound's forward pricing for annual FX flows under $20M is 0.45% with a 5% margin deposit (see glossary), or 0.75% with no deposit. Traditional brokers typically embed their markup inside the quoted rate rather than disclosing it as a separate figure, making true cost comparison difficult, a pattern covered in detail in our guide to what to look for in FX hedging software. The markup above the interbank rate (see glossary) is the provider's revenue, and most businesses never see that figure as a clean line item.
On Bound the agreed spread is a single all-in fee that already includes the liquidity provider's fee, so there is no second layer of cost to find. The full rate card and amendment schedule are published, and every fee appears on screen before you confirm any trade or change. Bound also displays the forward points (see glossary) and passes positive forward points on to the customer, where brokers typically keep them as profit.
Partial cover: Defend some, keep some upside
Hedging part of a forecast exposure protects the baseline gross margin against adverse moves while leaving the remainder available to convert at spot if the market moves favourably. Businesses use it where forecast accuracy is moderate, because it reduces the cost of over-hedging exposure that does not ultimately materialise.
The risk is symmetric: the unhedged portion is exposed in both directions, so a material adverse move can still push the blended rate (see glossary) below the budget assumption. A 50% hedge ratio (see glossary) means 50% of the exposure remains at spot risk. If that unhedged portion converts at a rate 6% worse than budget, the blended rate on the total exposure lands 3% below the budget assumption, which on a material notional can still produce a visible margin miss.
Because partial cover is usually chosen when forecast confidence is moderate, the amounts or dates on the hedged portion are more likely to need adjusting later than on a fully-covered position. If a payment date shifts after you have booked an FX forward, you change the settlement date yourself, in a few clicks, without a broker call or an email, and the fee is shown on screen before you confirm. With a broker the same change typically means a call or several emails, and the cost is usually not disclosed in advance.
Layered cover over time
Rather than locking the full notional at a single forward rate, a layered programme splits the exposure into smaller portions executed across the programme duration. The result is a trailing average of the rates at which each portion was booked, which smooths out the timing risk of a single large execution at an unfavourable moment.
Bound's Averaging strategy automates this entirely. You set a rule covering the currency to sell or buy, the amount, the start day of the month and how far out to hedge, and Bound books the daily legs (see glossary) against it. Without the rule in place, someone would need to manually book a separate trade for each forward month in the programme on every day it runs.
The trade-off is timing: a layered programme locks successive portions at whatever rates prevail on each execution day, so if the market moves strongly against you early in the programme, those portions are booked at unfavourable rates before the average has time to recover. For businesses that want the floor itself to improve as the market moves in their favour, a trailing stop (see glossary) does this automatically. Rather than a fixed worst-case rate, a trailing stop adjusts its trigger level as the market moves in your favour, so as the rate improves, the floor moves up with it, locking in the better level, while still capping the downside if the market reverses. This is covered in detail in the Ranging section below.
This approach suits businesses whose FX risk arises from operating expenses, typically tech companies that raise in US dollars and carry payroll, contractor and office costs in sterling or euros, where the aim is not to achieve a particular rate but to avoid trading at the worst point.
Ranging: Executing within a defined band
Bound's Ranging strategy is order-based rather than a plain forward. A stop and a limit are placed together at the outset. The stop sets the worst rate you are willing to accept and executes automatically if the market reaches it. The limit sets the target rate at which you are content to execute, and triggers if the market moves favourably to that level. If the market does not reach either the stop or the limit before the contract matures, the trade executes at the prevailing market rate at maturity. Where a trailing stop (see glossary) is used, the worst-case rate moves with the market when the market moves in your favour, so the floor you set at the outset improves rather than staying where it was.
The result is an executed rate that falls within a band you have defined in advance, between your protection level and your target level, rather than a single point locked at booking. This suits businesses that want certainty about the worst-case rate without giving up the possibility of executing at a better rate if the market moves favourably before the limit could trigger. The parameters are set once in the platform, and execution is automatic when the market reaches the defined level.
The trade-off is that execution is conditional: the outcome at the limit rate is not guaranteed, because it depends on the market reaching it. Ranging suits businesses that have a budget rate to defend and a target rate they would be content to execute at, and who want the floor defined in advance rather than left to a spot decision at the point of payment.
What should determine your hedging approach
How much of your exposure to cover, and which strategy to use, should be driven by how much margin the business can afford to lose if rates move against you, how reliably you can predict the currency amounts and timing of your payments, and your working capital position, not by a view on where the rate is headed. Timing the market is a different activity from defending a budget rate, and conflating the two produces the worst outcome: ad-hoc decisions made under time pressure that protect nothing systematically.
Three inputs drive the decision:
Gross margin tolerance: How far can the blended execution rate deviate from budget before the business misses its EBITDA target?
Forecast confidence: How reliably can you predict the currency volumes and settlement dates for the next 6-12 months?
Working capital position: Can the business post a 5% margin deposit on forward contracts, or does hedging with no deposit better preserve operational liquidity?
Setting these three inputs down in writing, rather than deciding them case by case, is what turns a hedging programme into something repeatable. For a structured way to do that, see our guide to writing an FX hedging policy.
How margin sensitivity shapes your approach
Low-margin businesses, typically importers or distributors operating at gross margins in the mid single digits, have almost no buffer before a currency move produces a board-level miss. For a business at 5% gross margin, a 3% adverse rate move on the foreign currency portion of COGS (see glossary) absorbs more than half the margin on that portion. Take a UK importer with £1M in revenue and £800,000 of USD-denominated supplier costs, producing a gross margin of roughly £50,000. A 3% adverse move on the full £800,000 of COGS adds approximately £24,000 to the cost base, cutting the gross margin in half before any other costs are counted. At that sensitivity, how much of the exposure is left uncovered is what determines whether the budget rate holds.
High-margin SaaS and tech businesses have more headroom on margin, but the reason to hedge is different rather than absent. For these businesses the exposure typically arises from operating expenses, typically payroll, contractors and office costs in sterling or euros against revenue or funding raised in US dollars, and the concern is cash flow and forecast accuracy rather than margin. FX variance still affects EBITDA, reduces forecast accuracy, and complicates board reporting.
How often to revisit the position
A monthly review covers the key operational questions for businesses with recurring multi-currency exposure. Three questions come up in most cycles: whether the current hedge ratio still reflects actual forecast volumes, whether any amendment is required on existing positions because payment dates have shifted, and whether new exposure has appeared that the current programme does not cover. On a rolling 12-month hedge you do not have to extend the tenor (see glossary) by hand, because when one month settles a new month is added at the end automatically.
Counterparty standing and safeguarding
Who holds the position
A defensible programme also has to answer where the hedges sit and what happens to them if the provider fails. Bound holds two FCA authorisations, as a UK MiFID (see glossary) investment firm (FRN 966723) and as an Electronic Money Institution (FRN 1036025). Where a regulated FX contract is in your favour, Bound segregates an equivalent amount as client money under FCA rules, held in a client money bank account opened in Bound's name but for your benefit. Margin posted may also qualify as client money.
Under the EMI permission, cash on account is typically ring-fenced in segregated accounts with UK-authorised banks, though e-money balances are not deposits and are not FSCS-covered. Once funds are reserved or due for settlement they are no longer subject to safeguarding protections, because at that point they are being applied to complete the transaction. Eligible client money on regulated FX hedging is FSCS-protected (see glossary) up to £120,000 per eligible customer, per authorised institution. That combination of two authorisations is uncommon among UK FX providers.
CFO checklist: Four questions to ask your broker before locking in a rate
What is the exact markup in points or percentage above the interbank rate on this trade? Bound's benchmarking tool shows where a quoted rate sits against the market rather than leaving you to construct the comparison.
Are you showing me the forward points, and do I get them? Forward points reflect the interest rate differential between the two currencies, and the further out the settlement date, the larger the effect. Bound displays them and passes positive forward points on to the customer. Brokers typically do not show a positive forward point and keep it as profit.
What are the specific, scheduled fees if I need to amend the settlement date or split this forward contract?
Where is my client money held, and is it segregated from the provider's own operational funds?
If you cannot get clean, written answers to all four before execution, the cost and risk profile of the trade is not fully disclosed. For a side-by-side look at how brokers, ERP-led platforms and automation-first providers like Bound compare across these criteria, see our comparison of currency risk management platforms.
Setting your next budget rate better
Building in a realistic buffer
GBP/EUR moved between approximately 1.13 and 1.18 over the twelve months to August 2026, a band of roughly 4.4%. A budget rate set at the strongest point in that range, leaves the business exposed if the market moves back toward the other end of the range before the exposure is hedged. Some businesses set the budget rate at the midpoint of the recent range instead, so the annual plan is not built on a rate that may already be close to its peak.
When to lock rates before budget sign-off
For highly predictable capital expenditures or recurring supplier contracts where volumes and timing are known before the fiscal year begins, pre-hedging before sign-off means the board approves a budget built around a rate already secured rather than one assumed. For the full operational framework, from identifying exposure through to board-ready reporting, see the CFO's guide to corporate FX risk management.
Book a demo to see how exposure calculation, automated execution and trade record write-back work in practice.
FAQs
Can I change my budget rate mid-year?
You can revise a budget rate, but doing so requires re-pricing your commercial model and updating the EBITDA figure the board has approved, which could create significant downstream disruption across pricing, cost modelling, and financial reporting. An FX hedging policy is designed to defend the original rate rather than force that revision.
What if spot moves in my favour?
Hedging is not a mechanism for making money on currency, it is a mechanism for protecting the rate the business planned around. Missing a favourable move on a fully-hedged position is not a failure, it is the hedge doing exactly what it was designed to do. If you have locked 100% of the exposure via FX forward contracts, you will not benefit from a favourable spot move because the rate is fixed at the forward price. If you have hedged part of the exposure, the unhedged portion converts at the prevailing spot rate, capturing the improvement on that part. On a layered programme each leg is booked at the rate available on its execution day, so a favourable move is picked up by the legs booked after it.
How much cover do most businesses take?
There is no universal standard. The right ratio depends on gross margin tolerance, forecast confidence, and working capital position, not on a market view. It also does not have to absorb all of your forecast uncertainty, because amounts and settlement dates can be changed after booking, with the fee shown on screen before you confirm.
What does it cost to amend a forward contract on Bound?
Bound publishes the schedule and shows the fee on screen before you confirm. Moving the settlement date costs 0.05% and decreasing the amount costs 0.05%. Increasing the amount is priced as a new booking at your tier, so at the entry tier with a 5% margin deposit that portion costs 0.45%, and it books at the prevailing forward rate, which gives the position a blended rate. Amendments can be made up to and including the settlement date.
Does defending a budget rate require posting collateral?
Not necessarily. Bound offers FX forward contracts with no margin deposit for businesses that do not want to tie up working capital. Hedging with a 5% margin deposit is also available at a lower spread. Where a margin deposit is in place, the security transfers to Bound under a Title Transfer Collateral Agreement (see glossary) and is returned, or netted off, when the trade settles. That arrangement isn't available to retail clients, and the exact terms are agreed at account setup. Traditional brokers and banks typically require an upfront margin deposit of 5% to 10% of contract value.
Key terms
Blended rate: The average exchange rate achieved across a portfolio of forward contracts or spot conversions on the same currency pair. On a partial hedge, the blended rate reflects the weighted average of the hedged portion (at the forward rate) and the unhedged portion (at the spot rate at settlement).
Budget rate: The exchange rate a business uses when building its annual financial plan. Once embedded in product pricing, supplier cost models, and the EBITDA target approved by the board, it becomes the baseline the business is commercially committed to achieving.
Currency swap: An instrument used to move part of a forward contract to an earlier settlement date. On Bound, a drawdown uses a currency swap to bring forward part of the notional without cancelling the original contract.
COGS (Cost of Goods Sold): The direct costs attributable to producing the goods a business sells, including materials and direct labour. For importers and distributors with foreign-currency supplier costs, COGS is the primary source of FX transactional exposure: an adverse rate move increases the sterling cost of goods purchased in a foreign currency, directly reducing gross margin.
Daily legs: The individual forward contract bookings that make up a layered averaging programme. On Bound's Averaging strategy, the programme executes one leg per day across the programme duration, each for a portion of the total notional and each booked at the rate available on that day. The collective result is a trailing average rate across all legs booked.
Drawdown: The early utilisation of part of a forward contract. Rather than waiting for the full notional to settle on the original date, a drawdown exchanges part of the amount at an earlier date, typically via a currency swap.
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation): A measure of operating profit that strips out financing costs, tax charges and non-cash accounting adjustments. Used as a proxy for underlying business performance and the figure most commonly presented to boards and investors as a headline profitability target. FX variance that erodes gross margin reduces EBITDA directly and requires explanation in board reporting.
FX forward contract (forward contract): A binding agreement to exchange a specified amount of currency at a fixed rate on a future settlement date, eliminating rate risk for that transaction.
Forward points: The adjustment added to or subtracted from the spot rate to produce the forward rate. They reflect the interest rate differential between the two currencies and grow in magnitude the further out the settlement date. Bound displays forward points and passes positive forward points on to the customer.
FSCS (Financial Services Compensation Scheme): The UK's statutory deposit and investment protection scheme. Eligible client money on regulated FX contracts with Bound is FSCS-protected up to £120,000 per eligible customer, per authorised institution. E-money balances held under the EMI permission are not deposits and are not FSCS-covered.
Hedge ratio: The proportion of an identified foreign currency exposure that is covered by a hedging instrument. A hedge ratio of 80% means that 80% of the net exposure is hedged using a forward contract or similar instrument, while the remaining 20% is left unhedged. The policy should set the appropriate ratio for each type of exposure and explain the reasoning behind it.
Interbank rate: The wholesale exchange rate at which major banks trade currency with one another. Retail and corporate FX providers add a markup above this rate. The difference is the provider's spread. Bound discloses this markup as a separate figure on screen before execution.
Layered averaging (layering): A hedging strategy that splits a total currency exposure into smaller portions executed across a programme duration rather than at a single point. Each portion is booked at the rate available on its execution day, producing a trailing average rate across the programme. Because no single rate is locked for the full notional, the approach reduces the risk of executing the entire exposure at an unfavourable moment. Also called a layered programme or layered cover; layering is the term most commonly used outside Bound.
Margin deposit: Collateral posted upfront against a forward contract to cover potential mark-to-market exposure. Bound offers forward contracts with no margin deposit at a higher spread, and with a 5% margin deposit at a lower spread.
Mark-to-market: The current market value of an open forward contract, reflecting whether the position would show a gain or loss if closed today. Closing a forward early is at Bound's discretion and settles that amount, which can be positive or negative to the customer.
MiFID (Markets in Financial Instruments Directive): EU-derived regulation governing investment firms and financial instruments, including FX derivatives. Bound is authorised by the FCA as a UK MiFID investment firm (FRN 966723), which means regulated FX contracts are subject to client money rules and eligible contracts are FSCS-protected.
Notional amount: The face value of a forward contract, the total amount of currency to be exchanged at the settlement date. The notional is set at booking and can be decreased (at a fee of 0.05%) or increased (priced as a new booking at the prevailing rate) before settlement.
Ranging: An order-based hedging strategy in which a stop and a limit are placed together at the outset. The stop sets the worst-case rate at which the trade executes automatically if the market reaches it, and the limit sets the target rate at which the trade executes if the market moves favourably. The result is an executed rate that falls within a defined band rather than a single rate locked at booking. Where a trailing stop is used, the worst-case rate adjusts upward as the market moves in the customer's favour.
Settlement date: The agreed future date on which a forward contract is executed and the currencies are exchanged at the locked-in rate.
Spot rate: The current market exchange rate for immediate settlement, typically within two business days. Unhedged exposure converts at whatever the spot rate is on the settlement date, which may be materially different from the budget rate set months earlier.
Spread: The difference between the interbank rate and the rate at which a forward contract is executed. It is the provider's fee for the transaction. Bound expresses this as a fixed percentage disclosed on screen before you confirm, so the all-in cost is known before execution.
Tenor: The duration of a forward contract, measured from the booking date to the settlement date. On a rolling 12-month hedge, when one month settles a new month is added at the end automatically.
Title Transfer Collateral Agreement (TTCA): The legal mechanism under which a margin deposit posted against a forward contract transfers ownership of that cash to Bound as security. The amount is returned, or netted off against the settlement, when the trade closes. This arrangement is not available to retail clients.
Trailing stop: A stop order whose worst-case rate adjusts upward as the market moves in the customer's favour. Rather than fixing the floor at the level set at booking, the floor rises with the market, so the minimum protected rate improves if conditions are favourable before execution.
Transactional exposure: FX risk arising from committed future cash flows denominated in foreign currency, such as supplier invoices or customer receipts.
No opinion given in the material constitutes a recommendation by Bound Rates Limited that any particular transaction or investment strategy is suitable for any specific company or person. Results may and will vary. The information in this publication does not constitute legal, tax or other professional advice from Bound Rates Limited or its affiliates.
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