As a general rule, all transactions are executed at current market rates. At times,
however, commercial considerations may dictate otherwise. In that event, the
Committee recommends explicit controls and specific procedures. Details of
these procedures are provided in a letter published by the Foreign Exchange
Committee.
As noted in the document, deviation from prevailing market rates involves
accounting, credit, and propriety risks. Accommodation of customer requests for
off-market transactions (OMTs) or historical rate rollovers (HRROs) should be
selective, restricted, and well documented, and should not be allowed if the sole
intent is to hide a loss or extend a profit or loss position. Counterparties should
also show that a requested HRRO is matched by a real commercial flow.
Finally, no contract for OMTs/HRROs should extend for more than six months
from the original settlement date or over a fiscal year-end unless justified by an
exceptional circumstance such as a delayed shipment. ;)
however, commercial considerations may dictate otherwise. In that event, the
Committee recommends explicit controls and specific procedures. Details of
these procedures are provided in a letter published by the Foreign Exchange
Committee.
As noted in the document, deviation from prevailing market rates involves
accounting, credit, and propriety risks. Accommodation of customer requests for
off-market transactions (OMTs) or historical rate rollovers (HRROs) should be
selective, restricted, and well documented, and should not be allowed if the sole
intent is to hide a loss or extend a profit or loss position. Counterparties should
also show that a requested HRRO is matched by a real commercial flow.
Finally, no contract for OMTs/HRROs should extend for more than six months
from the original settlement date or over a fiscal year-end unless justified by an
exceptional circumstance such as a delayed shipment. ;)
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