Yes - Two alternatives exist when a structured hedge is to be pre-delivered.Firstly, if a structured product has become 100% certain in its outcome (i.e. a rate has been 'locked-in'), the hedge can be pre-delivered as if it were a Forward Exchange Contract (FEC). If the outcome is still uncertain, the structure can be sold back, and the current market rate adjusted for any benefit or cost resulting.
Q.
I pay for an option at maturity, rather than on the deal date?
A.
Yes. Paying for an option at maturity is called paying premium in arrears. The cash premium can be adjusted for funding and paid at maturity, or the funding adjusted premium can be paid in exchange points. The Currency Protection Contract (CPT) is an example of where the premium is paid in arrears as exchange points.
Q.
If I no longer require my cover, can I close it out?
A.
Yes. Hedge cover can be closed out at any stage. This process will involve selling the hedge back to us, and any residual benefit or cost being settled in cash.
24 Hour Nightdesk
Q.
Can I leave a Call Level with the FX Night Desk?
A.
Yes. If you leave a Call Level at a particular FX rate, we will call you when that level trades in the market. You can specify a cut off time for a Call Level or leave it on throughout the night.
Q.
Can I leave an FX Order or alter an existing FX Order with the Night Desk?
A.
Yes, any FX Orders can be placed, amended, cancelled or have specific instructions attached to them by contacting the FX Night Desk throughout the night.
Q.
What currencies can I transact with the Night Desk?
A.
All major currencies and a majority of the minors. Some currencies have trading restrictions attached to them, so might not be able to be transacted overnight. Orders for these currencies can be left with the Night Desk and executed when the appropriate market opens.
Q.
Can I use the Night Desk if I am travelling outside of the country?
A.
Yes you can. Contact your markets advisor who will be able to provide you with the appropriate telephone numbers.
Tendering Solutions
Q.
If I use Currency Options to hedge my FX exposure in a tendering process, do I have to pay a premium for the options?
A.
There are a variety of Option Structures that can be used to hedge currency exposure in a tendering process. Whether you pay premium will depend on the type of Option Structure that fits your requirements.
Q.
If I take out FX cover in the form of a Foreign Exchange Contract (FEC) as part of the tender process and fail to win the tender, will I incur any currency losses?
A.
Possibly. If you have to unwind FX cover that you have taken, the chances that the spot market has moved over the period of the tender process are high. It will then come down to whether the market has moved higher or lower than the contract rate of the FEC.
Q.
Can I sell my Currency Options back to the bank if I am unsuccessful in the tendering process?
A.
There are a variety of Option Structures that can be used to hedge currency exposure in a tendering process. Whether you pay premium will depend on the type of Option Structure that fits your requirements.
Q.
If I have used Options to cover my FX exposure during the tendering process and I am successful in tendering for the business, can I restructure my Options to more accurately reflect my known exposure?
A.
Yes it is possible to restructure your Options cover into structures that will be more in line with your exposure for the duration of the tender. Your markets advisor will be able to advise on strategies.
eFX Dealing
Q.
When I log in to eFX Dealing, I cannot see any rates. Why?
A.
You need to set up a new rates panel. On the Rates tab, click New, add a Setup name then add the currency pairs you wish to view.
Q.
The Manual Rate Intervention quoted me a rate, then cancelled it before I could respond. Why?
A.
It may be that some market aspects of the trade have changed; re-submit your request.
Q.
How do I initiate a deal?
A.
Click on the currency pair you require on the rates screen. Populate the displayed template screen with specific deal information:
Product
Currency Amount
Settlement date
and click on "Request Rates" to request price.
Q.
How will I know the Contract Number?
A.
You will see the assigned eFX Deal Number at the bottom of the template on immediate booking of a trade. It is also on your deal acknowledgement. The assigned trade number will appear on your Deal Log (Blotter) later that day. In the Deal Log this will appear in the "Contract No." column.
Q.
How do I look up a deal?
A.
To locate a deal, open the Deal Log (Blotter) and do an Archive search. If you know the Deal ID, enter the number into the field and select 'Search Log'. If not, choose a date range the deal would have fallen in (taking GMT in to account) and select 'Search Log'.
Q.
How do I log in to eFX Dealing?
A.
Follow these easy steps:
Log in with your user name and password
Click on Dealing Centre
Click on Start eFX Dealing
The eFX Dealing main window will display
Q.
I want to review the details of the near leg of a swap. Where do I find that detail and how do I keep track of these maturity dates?
A.
The details of both legs are shown on the systems deal acknowledgement.
To view the acknowledgement, locate the deal in the Deal Log (Blotter), double click on the deal then select 'Print'.
Q.
What is the "Memo" button for? When should I use it?
A.
The Memo button will activate a window which permits the entry of free-format text.
To assist in the processing of your transactions, we recommend that prior to submitting each rate request, you insert details of the transaction type (T/T, L/Credit number etc) or your own invoice reference numbers.
This information will be displayed on the eFX Dealing acknowledgment.
Q.
What is "Chat" & how does it work?
A.
For a range of reasons the Bank's foreign Exchange Traders may need to communicate with you when pricing a deal.
Chat is a live, on-line, screen based facility allowing you to reply to a dealer's Chat.
Q.
How does the security work?
A.
Data is moved from your computer across the Internet to our computers in data "envelopes", known as packets. When these packets arrive we re-assemble them to understand the message. To ensure that no-one can read our communication we encode, or encrypt, every packet that is sent so that only we can read each other's message. This is achieved by using a digital certificate in combination with Secure Socket Layer technology. In effect, these digital certificates are electronic identities or signatures on the system; it is like we have a unique padlock on each of these packets which only we can open because we have the unique key to the lock.
Q.
Can anyone copy or steal my Digital Certificate?
A.
Your digital certificate has two parts, referred to as a public and private key. Your public key is available in the public domain to verify your identity, but you private key is held on the hard drive of your computer so you control access. It is important to maintain security of your private key by using password protection of your private key, access controls to products or operating systems, virus protection and firewall protection.
For further information about digital certificates go to www.betrusted.com.
Download and complete the forms on the registration page. Post or fax these forms to your Markets Contact.
If your application is successful, you will be notified by email. You will need to return to nabCapital and apply for a digital certificate.
Bond Pricing Analysis
Q.
How up to date are the yields used in the NAB buys and NAB sells fields?
A.
Bond & Credit markets has been designed to provide Sydney Futures Exchange live rates together with a most current exchange for physical (EFP) trading margin together with an appropriate dealing bid/offer spread.
Q.
What is a bond?
A.
A bond is a security that embodies a financial obligation between an issuer (borrower) and a buyer (lender). The issuer agrees to pay a fixed interest rate over a number of discrete periods (normally half-years) to the lender in return for funds borrowed with the principal to be paid back on the bond's maturity. The initial buyer (lender) can sell the bond to another investor before maturity if they wish to realise the capital tied up in the bond.
Q.
What is a coupon?
A.
The coupon is fixed from the date the bond is issued. It represents the original interest rate the issuer agreed to pay to investors. This is not necessarily the interest rate you receive on your investment. The interest rate you receive (yield to maturity) is determined by the premium, or discount you pay for a specified face value of bonds. You will typically receive half the coupon every 6 months if it is a semi-annual bond. The coupon is expressed as a percentage per annum.
Q.
What is the face value?
A.
The face value of the bond is the amount to be repaid to the investor at maturity. Please note that if you buy or sell a set face value of bonds, it is almost always different to the actual amount of cash that will be exchanged in the deal - see "What is a settlement amount?
Q.
What is a settlement amount?
A.
The settlement amount is the sum of money that is transferred between buyer and seller on the settlement date. It is almost always a different number to the face value. The only time the face value and the settlement amount will be the same is when the yield is exactly the same as the coupon.
Q.
What is the yield?
A.
Yield is shorthand for yield to maturity. It is a convention used by the market to easily facilitate recognition of the market value of a series of cashflows (which is what a bond really is). In essence it indicates the per annum interest rate you receive for the life of your investment in the bond. In reality though, interest rates change and you may actually be reinvesting the coupons you receive over time at different rates to those that you initially invested at.
Q.
Is the interest rate I get on my money derived from the coupon, or the yield?
A.
The interest rate you are getting on your money invested is derived from the yield. The yield is expressed as a per-annum figure.
Q.
Can I transact on this site?
A.
Not at this stage. We do however, plan to provide on-line execution in the future
Q.
Who writes the research?
A.
All the research on the site is currently authored internally. National's Global Wholesale Financial Services has a number of areas that perform valuable economic, credit and quantitative research.
Q.
How long is research kept on the site?
A.
Credit research on issuer's financial performance is kept for 1 year. Relative value trade ideas are more perishable and will be kept on the site for approximately 1 month.
Q.
How up to date are the rates used in the charts?
A.
The charts are derived from our Bond & Credit markets database, which is updated each day with close of business-day rates. The graphs depict a period of historical data of approximately 1 year.
Q.
I have completed my research on a particular security, who do I call to do a trade?
A.
Bond and Credit markets has been designed to provide Sydney Futures Exchange live rates together with a most current exchange for physical (EFP) trading margin together with an appropriate dealing bid/offer spread.
Q.
I need to know more information before I make an investment decision, whom do I call?
A.
Telephone one of our experienced Debt Markets advisers who will be happy to arrange a dealing price on the security you are interested in purchasing or selling.
Q.
I would like to compare these securities with other investments the National offers, who should I call?
A.
We have numerous Debt Market advisers located in major global financial centres who are ready to answer any additional questions you may have about Australian fixed income securities.
Q.
Will I be able to trade on this site in the future?
A.
Yes.
Q.
There are some aspects of this site that I believe can be improved. Where can I make these suggestions?
A.
In the bottom banner of each page we provide a feedback link. Make your suggestions via this e-mail facility or alternatively, call one of our Debt Markets advisers and they will convey your suggestions to the Bond and Credit markets project manager.
Q.
There are some functions on this site, which are hard to understand. Where can I learn about what these mean?
A.
The glossary is a good place to start. If your require a more comprehensive explanation of any aspect of securities investment then our Debt Markets advisers detailed on the contacts page will be happy to assist you.
Q.
What is Bond Relative Value Rank?
A.
The relative value rank indicates the relative position of today's bond spread vs the range traded over the last 6 months. For example, if a bond issue is currently trading at 47 and the last 5 days spreads were 43,44,49,44 and 47, then the relative value rank would be 80% in this case. A higher (lower) value generally denotes that the bond is cheaper (more expensive) relative to its trading history.
Q.
What is Swap Relative Value Rank?
A.
The relative value rank indicates the relative position of today's swap spread vs the range traded over the last 6 months. For example, if a bond issue is currently trading at 47 and the last 5 days spreads were 43,44,49,44 and 47, then the relative value rank would be 80% in this case. A higher (lower) value generally denotes that the bond is cheaper (more expensive) relative to its trading history.
Q.
When using the search function, how many filters do I need to choose?
A.
From zero to as many as you like. If you choose zero and just push go the search engine will respond by extracting the whole database. The more filters you choose the narrower your results field will be.
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