Net long or short position in one or more currencies that a dealer can carry over into the next dealing day. Passing the book to other bank dealing rooms in the next trading time zone reduces the need for dealers to maintain these unmonitored exposures.
Is an economy on a high growth rate trajectory placing pressure on the production capacity resulting in increased inflationary pressures and higher interest rates.
Over The Counter (OTC)
A market conducted directly between dealers and principals via a telephone and computer network rather than a regulated exchange trading floor.
The forward rate of a foreign exchange deal based on spot price plus forward discount/premium.
Foreign exchange transaction involving either the purchase or the sale of a currency for settlement at a future date.
A forward deal that is not part of a swap operation.
A put option is out-of-the-money if the exercise/strike price is below the price of the underlying instrument. A call option is out-of-the money if the exercise/strike price is higher than the price of the underlying instrument.
A contract conferring the right but not the obligation to buy (call) or to sell (put) a specified amount of an instrument at a specified price within a predetermined time period.
All options of the same class having the same exercise/strike price and expiration date.
All options of the same type - calls or puts - listed on the same underlying instrument.
Any deal which has not been settled by physical payment or reversed by an equal and opposite deal for the same value date. It can be termed as a high risk, high return proposition.
Open Market Operations
The central bank operations in the markets to influence exchange and interest rates.
One Cancels Other Order
Where the execution of one order automatically cancels a previous order also referred to as OCO or "One cancels the other".
Old lady of Threadneedle Street, a term for the Bank of England.
Official Settlements Account
A US balance of payments measure based on movement of dollars in foreign official holdings and US reserves. Also referred to as reserve transaction account.
The rate at which a dealer is willing to sell the base currency.
The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market but only with other foreign banks. This is known as an off shore banking unit.