3.3.2.50 Confirmation for Non-Deliverable Currency Option with commentary

Following is a sample confirmation for a non-deliverable currency option, with commentary included in footnotes to the confirmation. A sample confirmation without commentary can be found in 3.3.2.60 "Confirmation for Non-Deliverable Currency Option without commentary". 

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Sample Confirmation for Non - Deliverable Currency Option with commentary

[Letterhead of Party A]

[Date]

Reference Number [ ]

[Name and Address of Party B]

Dear

Currency Option

The purpose of this letter is to confirm the terms and conditions of the Non-Deliverable Currency Option Transaction entered into between us on the Trade Date specified below (the "Transaction"). This letter constitutes a "Confirmation" as referred to in the Master Agreement specified below.

The definitions and provisions contained in the 1998 FX and Currency Option Definitions (as published by the International Swaps and Derivatives Association, Inc, the Emerging Markets Traders Association and the Foreign Exchange Committee), are incorporated into this Confirmation. In the event of any inconsistency between those definitions and provisions and this Confirmation, this Confirmation will govern.

1. This Confirmation supplements, forms a part of, and is subject to the Master Agreement dated as of [insert date][1], as amended and supplemented from time to time between [Name of Party A] ("Party A") and [Name of Party B] ("Party A") (the "Agreement"). All provisions contained in the Agreement govern this Confirmation except as expressly modified below.

2. The terms of the Transaction to which this Confirmation relates are as follows:

(a)         General Terms:

 

Trade Date:[2]

Buyer:[3]

Seller:[4]

Currency Option Style:[5]

Currency Option Type:[6]

Call Currency [and Call
Currency Amount]:[7]

Put Currency [and Put
Currency Amount]:[8]

[Strike Price:[9]]

[Reference currency:]

[Settlement Currency:]

[Settlement Rate:][Settlement Rate Option:]

Expiration Date:[10]

Expiration Time:[11]

[Latest Expiration Time:]

[Automatic Exercise: Inapplicable]

Settlement:  Non-Deliverable

Settlement Date:[12]

[Valuation Date:]

[Averaging Date(s):]

[Exercise Period:]

[Specified Exercise Date(s):]

[Premium:[13]]

[Price:330] [          ] [payable in [          ] [equal]

instalments on each Premium Payment Date] [as follows:          ]

[Premium Payment Date[s]:[14]] [Specify date or dates]

 

3. Calculation Agent:

4. Account Details:[15]

Account for payments to Party A:

Account for payments to Party B:

5. Offices[16]

The Office of Party A for the Transaction is  ;

The Office of Party B for the Transaction is  ;

6. [Business Day:]

7. [Business Day Convention:]

This Confirmation supersedes and replaces any other confirmation (including a SWIFT MT300 or telephone confirmation), if any, sent in connection with this Transaction on or prior to the date hereof.

[17]Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us or by sending to us a letter substantially similar to this letter, which letter sets forth the material terms of the Transaction to which this Confirmation relates and indicates your agreement to those terms.

Yours sincerely

[name of party preparing Confirmation]

By:

Name:

Title:

Confirmed as of the date first written:

[name of other party]

By: 

Name:

Title:

 

[1]  The date of the relevant ISDA Master Agreement is inserted in paragraph 1 of the Confirmation. When verifying the date, participants should check that Party A and Party B are the same as the parties to the ISDA Master Agreement. Ensure that the opening paragraph is included because it provides the link between the Currency Option (defined as "Currency Option" in the Confirmation) and the term "Transaction" which is used throughout the ISDA Master Agreement to refer to any type of transaction documented under it.

[2]  This is the date on which the participants enter into the Currency Option.

[3]  Insert the name of the buyer of the Currency Option.

[4]  Insert the name of the seller of the Currency Option.

[5]  Specify European, American or Bermuda as appropriate.  The Australian market convention is that the option will be European style, unless otherwise agreed. 

[6]  Insert either "Put" or "Call" as applicable.

[7]  These terms are defined in Section 3.1 (b) & (c) respectively of the 1998 FX and Currency Option Definitions. Specify the currency and the amount to be delivered by the Seller.

[8]  These terms are defined in Section 3.1 (d) & (e) respectively of the 1998 FX and Currency Option Definitions.  Specify the currency and the amount to be delivered by the Buyer.

[9]  This is the rate of exchange between the Put Currency and the Call Currency should the Currency Option be exercised. Express it as a decimal. 

[10]  This term is defined in Section 3.5 (d) of the 1998 FX and Currency Option Definitions. 

Specify one date. For a European Option it will be the date when the Notice of Exercise will be effective.  For an American Option, it will be the last day of the Exercise Period. The Exercise Period for an American Option is defined in Section 3.5 (c) of the 1998 FX and Currency Option Definitions. For a Bermuda Option, there will be several dates. The Exercise Period for a Bermuda Option is defined in Section 3.5 (c) of the 1998 FX and Currency Option Definitions.

[11]  This term is defined in Section 3.5 (e) of the 1998 FX and Currency Option Definitions.  This time will depend on the currencies traded. Insert the appropriate time (ensure the city to which the time applies is specified).  The Notice of Exercise must be delivered on or before that time.

[12]  Include this item if participants want to specify the Settlement Date as a date other than the spot delivery day for the relevant Currency Pair as generally used by the Australian foreign exchange market.  This is also referred to as the Payment Date.

[13]  Premium is defined in Section 3.4 (a) of the 1998 FX and Currency Option Definitions.  Only one of the terms "Premium" and "Price" should be used in a Confirmation.

[14]  This term is defined in Section 3.4 (b) of the 1998 FX and Currency Option Definitions.

[15]  Insert details of the bank account into which the Premium payable to the Seller is payable. 

[16]  If a party intends to make and receive payments under different Transactions through different branches or offices, it should be specified in the Schedule to the ISDA Master Agreement as a Multibranch party. If a party is a Multibranch party, an item relating to Offices should be included in the Confirmation in which the relevant branch is identified.

[17]  If it is necessary to amend the ISDA Master Agreement, then amendments can be inserted before the closing paragraph which commences "Please confirm that the foregoing".


Last Update Date 29 Jun 2011