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15 DERIVATIVE FINANCIAL INSTRUMENTS
(a) THE GROUP
The Index linked notes represented investments made on behalf of clients in 2019. During the current year, all these investments have been transferred to the respective
client accounts.
(b) THE BANK
The Group and the Bank have positions in the following types of derivatives:
Forward contracts
Forward contracts are contractual agreements to buy or sell a specified financial instrument at a specific price and date in the future. Forward are customised contracts transacted in the over-the-counter market.
Spot Position
The current balance on spot position account reflect the bought/sold amounts (FX deals) in original currencies and equivalent amounts corresponding to the prevaling FX spot ’Accounting’ rate as of the settlement date.
Swaps
Swaps are derivatives in which two counterparties exchange cash flows of one party’s financial instrument for those of the other party’s financial instrument. The benefits in question depend on the type of financial instruments involved.
Option contracts
Option contracts give the buyer the right, but not the obligation, to buy (in the case of a call) or sell (in the case of a put) the underlying asset at a specific price on or before a certain date.
Option Linked Notes
Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any time within a specified period. These options do not bear any downside risk as the Group will not exercise the options should these prove unfavourable to the Group.
Index linked notes
Option contracts give the buyer the right, but not the obligation, to buy (in the case of a call) or sell (in the case of a put) the underlying asset at a specific price on or before a certain date.
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