Glossary of Terms

Account Takeover

Fraud in which criminals use stolen personal information to gain access to an account, change passwords, or make unauthorised transactions.

Advanced Encryption

Security measure that uses advanced encryption techniques to protect your personal data and financial transactions during transmission and storage.

Ask

The price at which the currency or instrument is offered.

At Par Forward Spread

When the forward price is equivalent to the spot price.

At the Price Stop-Loss Order

A stop-loss order that must be executed at the requested level regardless of market conditions.

Base Price

One hundredth of a percentage point; 50 basis points (50bp) is half a percentage point.

Bid-Offer Spread

The difference between the buy (bid) and sell (offer) price of a currency or financial instrument.

Buying Rate

Rate at which a bank is prepared to buy foreign exchange; also known as the bid rate.

Cable

Term used in the foreign exchange market for the US Dollar/British Pound rate.

CHAPS

Clearing House Automated Payment System.

Complaint Handling Principles

Currency Solutions’ commitment to accessibility, fairness, efficiency and transparency when resolving customer complaints as required by FCA guidelines.

Consumer Duty (FCA Principle 12)

New FCA principle of business requiring firms to act in the best interests of retail customers by ensuring products meet customer needs, provide fair value and clear, non-misleading information.

Contract Note

Confirmation sent after placing a foreign exchange contract detailing the currencies, amounts, exchange rate, total cost, and settlement date.

Correlation

A statistical measure referring to the relationship between two or more variables; suggests some causal relationship (e.g. the Swiss Franc can be closely correlated with the Euro).

Cross-Rate

The exchange rate between two currencies (e.g., US Dollar/Yen).

Currency

The type of money a country uses; can be traded for other currencies on the foreign exchange market, so each currency has a value relative to another.

Currency Option

A financial instrument giving the right, but not the obligation, to buy or sell a currency at a predetermined exchange rate (strike price) before a specified expiry date; includes call and put options and requires payment of a premium.

Delivery Date

The date of maturity of the contract when the exchange of the currencies is made; commonly known as the value date in FX or money markets.

Delivery Risk

When a counterparty is willing to complete a deal but is unable to do so.

Devaluation

Deliberate downward adjustment of a currency against its fixed parities or bands, normally by formal announcement.

Electronic Identity Verification (eIDV)

A method that uses public and private databases, such as credit reference agencies, the Electoral Roll, and global watch lists, to quickly and securely confirm an individual’s identity using personal information like name, date of birth, and address.

Email Interception/Redirection

Fraud tactic in which fraudsters hack email accounts or servers, monitor communications and change payment details in invoices to redirect funds to their own accounts.

Financial Data

In the privacy policy, financial data refers to bank account details.

Foreign Exchange Market

Market where currencies are traded internationally; about 4–5 trillion dollars are traded daily. Currency markets exist in the form of spot, forward, futures and options markets.

Foreign Exchange Risk (Currency Risk)

Potential for financial loss arising from fluctuations in exchange rates when making international payments or holding foreign-currency assets.

Foreign Exchange Risk Management

Strategies and practices such as forward contracts, options, and market orders that reduce exposure to currency risk and stabilise cash flows.

Forgery of Sender Information (Email Spoofing)

Fraud method that involves forging an email’s sender address and name so the message appears to come from a trusted source, manipulating the ‘From’ field to mislead recipients.

Forward Contract

A foreign exchange agreement to buy or sell currency at a predetermined rate for delivery on a future date (typically beyond two business days); locks in an exchange rate in advance to protect against currency fluctuations and manage future risk.

Fraud Prevention Tool

Top-tier global solution used by Currency Solutions to detect and stop fraudulent activity before it occurs, ensuring client security.

Global Personal Account

A personal account that lets you send and receive funds internationally from a single easy-to-use platform, enabling hassle-free cross-border transfers.

Hedging Strategy

Using financial instruments like forward contracts, options, and market orders to protect against adverse exchange-rate movements and stabilise margins.

IBAN (International Bank Account Number)

Standardised bank account identifier comprising a two-letter country code, a two-digit checksum and a domestic bank account number (BBAN) of up to 30 alphanumeric characters.

Impersonation Scam

Fraud in which scammers imitate legitimate organisations, such as tax authorities, police or Currency Solutions, to provoke you into acting quickly or making unauthorised transactions.

Implied Rates

The interest rate determined by calculating the difference between spot and forward rates.

Inconvertible/Non-deliverable Currency

Currency that cannot be exchanged for other currencies, either because it is forbidden by foreign exchange regulations.

Indicative Quote

A market-maker’s price that is not firm.

Inter-bank Rates

The bid and offer rates at which international banks place deposits with each other; basis of the interbank market.

Left-hand Side

Taking the left-hand side of a two-way quote, i.e. selling the quoted currency.

Liability

In FX terms, the obligation to deliver to a counterparty an amount of currency in respect of a balance sheet holding at a specified future date or in respect of an un-matured forward or spot transaction.

Limit Order

An instruction to buy or sell currency when the exchange rate reaches a predetermined favourable level; allows you to secure a better rate than the current market price.

Limit, Stop & Limit-Stop Orders

Tools that let you buy or sell currency at predetermined levels: limit orders execute at favourable rates; stop (or stop-loss) orders execute when the rate moves unfavourably; limit-stop orders combine both functions.

Limited Convertibility

When residents of a country are prohibited from buying other currencies even though non-residents may be free to buy or sell the national currency.

Maintenance Margin

The minimum margin which an investor must keep on deposit at all times in respect of each open contract.

Margin

An initial payment required when entering a forward contract; secures the contract and covers potential losses from currency movements.

Margin Call

Request for additional funds when the original margin on a forward contract is insufficient due to adverse exchange rate movements.

Mark to Market

The daily adjustment of an account to reflect accrued profits and losses, often required to calculate variations of margins.

Market Order

Instruction to buy or sell currency automatically when a specified target exchange rate is reached; it allows you to set a price and the order executes once the market hits that level.

Markup

Premium.

Mid-price or Middle Rate

The price halfway between the bid and ask prices; the average of both buying and selling prices offered by market makers.

Multi-Currency Account

Account that lets you hold, send and receive multiple currencies from one platform; helps reduce exchange-rate risks, offers hedging tools, and comes with a dedicated portfolio manager.

Offer

The price at which a seller is willing to sell. The best offer is the lowest price available.

Par

The official value of a currency.

Parities

The value of one currency in terms of another.

Parity

Dealer’s slang for “your price is the correct market price”; also refers to official rates in terms of SDR or other pegging currency.

Pip (Point)

100th part of a percent, normally 10,000 of any spot rate. It also refers to one percent on an interest rate or the smallest increment of price movement.

Portfolio Manager

Dedicated currency specialist who provides personal support and real-time market insights to help you secure competitive rates and manage currency risk.

Premium

Fee paid by the buyer to acquire a currency option; compensates the seller for granting the right to buy or sell at the strike price.

Quote

An indicative price quoted for information purposes but not to deal.

Rally

A recovery in price after a period of decline.

Rate Alert

A formal notification, issued to customers who have consented to receive such updates, advising them of specific exchange rate movements or when a chosen currency pair reaches a predefined target level.

Reserve Currency

Currency held by a central bank on a permanent basis as a store of international liquidity (e.g., Dollar, Euro, sterling).

Right-hand Side

To do a deal on the right-hand side of a two-way quote, normally to buy the currency and sell dollars.

Rolling a Contract

Moving the settlement date of a foreign exchange contract to a later date; may require an exchange-rate adjustment or additional payment.

Rollover

An overnight swap, specifically the next business day against the following business day (also called Tom-Next).

Safeguarded Funds

Customer funds held separately by FCA-regulated e-money partners at a credit institution to ensure your money remains protected even in the unlikely event of insolvency.

Same-Day Exchange

A foreign exchange transaction where currencies are bought and sold for delivery and settlement on the same business day; ideal for urgent transfers requiring immediate completion at the current market rate.

Selling Rate

Rate at which a bank is willing to sell foreign currency.

SEPA (Single Euro Payments Area)

SEPA allows customers to make cashless euro payments via credit transfer and direct debit across the EU and a few non-EU countries, with efficiency like national payments.

Settlement Date

The date by which an executed order must be settled by transferring instruments or currencies and funds between buyer and seller.

Settlement Risk

Risk associated with the non-settlement of the transaction by the counterparty.

Spot Contract

A foreign exchange agreement to buy or sell currency at the current market (spot) rate for near-immediate delivery, typically within two business days; provides instant execution without long-term commitment.

Spot Next

The overnight swap from the spot date to the next business day.

Spot Price/Rate

The price at which the currency is currently trading in the spot market.

Spread (Bid-Ask Spread)

The difference between the bid and ask price of a currency.

Stop-Loss Order

An instruction to buy or sell currency when the exchange rate moves unfavourably beyond a set level; helps protect against further losses by limiting downside risk.

Strong Customer Authentication (SCA)

A regulatory requirement that uses two independent authentication factors before approving transfers, providing secure access and protecting your money.

Swap

Simultaneous purchase and sale of the same amount of a currency for two different dates against the sale and purchase of another currency; in essence similar to borrowing one currency and lending another for the same period, with cost expressed in price differential.

Swap as a Percentage

Swaps expressed as an annualised percentage.

Swap Price

A price as a differential between two dates of the swap.

SWIFT (Society for Worldwide Interbank Telecommunications)

Belgian-based company providing the global electronic network for settlement of most foreign exchange transactions.

SWIFT/BIC Code

International bank identifier designating the payment beneficiary’s bank; typically 8–11 characters long, now called the Bank Identifier Code (BIC), and lacks a checksum unlike an IBAN.

Target Rate

Specific exchange rate set in a rate alert or market order; when the market hits this level, the alert triggers or the order executes.

Third-Party Fees (Intermediary Bank Fees)

Charges applied by intermediary or correspondent banks involved in processing an international payment; these fees are separate from your provider’s charges and may be deducted from the transferred amount before it reaches the recipient.

Tick

Minimum change in price, up or down.

Tier One

A measure of a bank’s financial strength used by the BIS; shareholders’ equity to cover actual and potential irredeemable and non-cumulative preference shares.

Trade Date

The date on which a trade occurs.

Trade Ticket

See deal ticket.

Tradeable Amount

Smallest transaction size acceptable.

Transaction Data

Information recorded during a currency exchange or payment, including details such as transaction amount, currencies exchanged, exchange rate, date, and counterparties; used to process, verify, and track foreign exchange activities securely.

Transaction Date

The date on which a trade occurs.

Transaction Monitoring

Real-time monitoring of transactions for unusual activity, enabling detection and prevention of potential fraud.

Two-Tier Market

A dual exchange rate system where normally only one rate is open to market pressure.

Two-Factor Authentication (2FA)

Security measure requiring two forms of verification before granting access to an account; provides an additional layer of protection against fraud.

Up-Tick

A transaction executed at a price greater than the previous transaction.

Value Date

For exchange contracts, the day on which the two contracting parties exchange the currencies being bought or sold. For a spot transaction, it is two business days forward; if it falls on a holiday, the date moves forward.

Value Spot

Normally settlement for two working days from today.

Value Today

Transaction executed for same day settlement; also referred to as a cash transaction.

Vishing

Voice phishing; scam callers impersonate financial institutions to trick people into sharing private information or authorising fraudulent transactions, often manipulating caller ID.

Volatility

A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes.