The party who borrows is in a long position, and the party who lends is in a short position. The transaction is essentially financially settled, where the difference between the interest agreed at the time of the transaction and the interest realised at maturity is recorded for the nominal value of the transaction (in a net manner).

Benefit

• With this product, it is possible to determine the interest on a credit or a loan in advance.
• We can fix the price of a short-term security that we want to buy or sell in the future.
• If we take the FRA, the product can be used as a hedge against falling interest rates; while in the event of a selling, the FRA provides coverage against rising interest rates.

Risks

• If not concluded by the client as a hedging asset, there is a risk of a change in the interest rate level.
• In the event of an early closure, a loss may occur on the transaction if the interest rate on the underlying product changes in a direction unfavourable to the client.
  
  

Experts

If you would like to become a client of OTP Global Markets, feel free to contact us.

Useful documents

These documents in English language to the person concerned shall be for information purposes only. OTP Bank Plc shall fulfil its obligations imposed by the legal regulations or requirement of supervisory authority by the documents in Hungarian language.
In the event of any discrepancy between the English language and Hungarian language versions, the Hungarian language version shall prevail.

Information on the suspension of the market making obligation (available only in Hungarian)