Accumulator ratio

An accumulator ratio allows you to benefit from an improved rate that is much better than the benchmark forward rate, provided that the spot rate is above the knock-out barrier. However, you may be obligated to buy an amount higher than the notional amount (at improved rate and within the limit of the defined ratio) if the spot rate at expiry is above the improved rate. The principle is to define before booking the contract, a schedule of daily or weekly fixings over a given period. The notional amount of the contract is then divided by the number of fixings to obtain the accumulated amount by fixing. At each observation, we will therefore compare the spot rate to the knock-out barrier rate to determine the accumulated amount. On a monthly basis or when the contract expires, you must buy the amount accumulated over the period. Please note that this strategy does not offer a guaranteed protection price and you remain fully exposed to adverse exchange rate fluctuations.

Complexity level :

:

Catégorie : 5 *

Guarenteed protection rate : No

Protection rate level against benchmark forward rate :
N/A

Amount dealt at expiry :
Potentially higher than the notional amount

In what market to use it ?

Participation in a favorable move in spot : No

At each daily or weekly fixings defined by the schedule, we will determine whether you accumulate currencies at the improved rate or not: Scenario 1
If the spot rate is better than the knock-out barrier rate, you accumulate twice the daily or weekly amount at the improved rate.

Scenario 2
If the spot rate is between the knock-out barrier rate and the improved rate, you accumulate the daily or weekly amount at the improved rate.

Scenario 3
If the spot rate is less favourable than the knock-out barrier rate, you accumulate nothing. On a monthly basis or at expiry, we look at the number of times you have accumulated the daily or weekly amount, and this determines the total amount you must buy at improved rate.

Currency cross	EUR / USD
Side	Buy USD
Contract maturity	12 months
Benchmark forward rate	1,1090
Protection rate level	N/A
Improved rate level	1,1300
Readjusted rate level	N/A
Low barrier level	1,0750
High barrier level	N/A
Participation rate	N/A
Ratio	1 : 2
Reserve of points	N/A
Type of contract	N/A
Frequency of fixings	Weekly
Frequency of deliveries	Monthly
Fixing	10 am, New-York time

Advantages

Disadvantages