FRA Settlement concern

mkh_ave · #1 (**permalink**) 01-03-2008, 12:40 AM

hi all,

got a hard question on FRA settlement questions,

if i short USD 1 mio 3X6 20/3/08-20/6/08 and
long USD 1 mio 3X6 10/3/08-10/6/08

will they be offset automatically? or do i had to pay/received the differen one by one?

thanks

Mynion · #2 (**permalink**) 01-03-2008, 10:41 AM

My understanding is that each position is settled in cash and won't offset automatically. However, the impact on your account would be an offset. You settle each cash position separate, so if their timing is off then yes, you may need cash in your account to settle one position before the other is settled.

However, I'm not an expert in Forward/Future Rate Agreements (FRAs) and maybe someone else can shed some light on this subject.

Sanabanana · #3 (**permalink**) 01-10-2008, 12:51 AM

I dont know either but I do agree with myuion on the offset automatically part!

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