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CNY Non Deliverable Forward

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With links between Hong Kong and Mainland China growing ever stronger, you may have growing business volume in China, thus an increasing need to hedge your Chinese Yuan exposure.
Chinese Yuan Non-Deliverable Forward (CNY NDF) is one of the hedging tools which helps you to avoid unnecessary fluctuation of your operating costs, to lock-in the return for your business in China.


Investment Horizons - Up-to-date FX Market Information

Quick Facts


Minimum Transaction Amount: USD 30,000
Transaction Tenors: 1, 2, 3, 6, 12 months
Forward Rate:
The exchange rate (expressed as the amount of Reference Currency per one unit of Settlement Currency) agreed between the Bank and the Customer on the Trade Date
Notional Amount:
The reference amount in the Settlement Currency agreed by the Bank and the Customer on the Trade Date, or if denominated in the Reference Currency, it means the stipulated quantity of Reference Currency divided by the Forward Rate
Reference Currency: Chinese Yuan (CNY)
Settlement Currency: United States Dollars (USD)
Settlement Currency Amount:
An amount expressed in the Settlement Currency calculated as follows:
Settlement Currency Amount = [Notional Amount x [1-Forward Rate/Settlement Rate]]
Settlement Date:
The date agreed by the Bank and the Customer on the Trade Date as being the date on which the Settlement Currency Amount shall be payable (or if that day is not a Business Day, the next day that is a Business Day)
Settlement Rate:
The central parity rate for CNY against USD as announced by the People’s Bank of China at http://www.pbc.gov.cn (expressed as the amount of Reference Currency per one unit of Settlement Currency) on the Valuation Date
Spot Date:
In relation to a CNY NDF Transaction, the second Business day after the Trade Date of such CNY NDF Transaction
Trade Date:
The date on which the Bank and Customer enter into a CNY NDF Transaction
Valuation Date:
The second Business Day prior to the Settlement Date
No principal protection
No callable by the Bank
Early liquidation right by the Customer
Embedded derivatives:
The forward contract which Customer enters into is a derivatives
Maximum potential loss:
Customer may lose more than the investment amount and the potential loss can be unlimited

Key Features


By entering into a CNY NDF Transaction, the Notional Amount, USD/CNY Forward Rate and Settlement Date are pre-determined and agreed between the Customer and the Bank
On the Settlement Date, the transaction is settled by either party making a net payment to the other party, of an amount in USD which is proportional to the difference between the agreed Forward Rate and the Settlement Rate. The whole process does not involve the actual delivery of CNY

How to Invest This Product


Trading Channel:
Communicating with our Treasury Advisors of Financial Markets Advisory Services. We will then quote the USD/CNY Forward Rate (and other terms and conditions, if applicable), which would be fixed when Customer places an order for this product

 

Learn more about Importat Facts of Chinese Yuan Non-Deliverable Forward


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Risk Disclosure
This webpage does not constitute advice to buy or sell any investment products and does not constitute an offer with respect to any investment products. Before making any investment decision, you are encouraged to consult your own independent financial advisors and read the relevant offering documents in order to ensure that you fully understand the risks associated with the investment products. This webpage does not constitute any offer, invitation or recommendation to any customers to enter into any securities transaction, nor does it constitute any prediction of likely future movements in prices of any securities. Investment products are not bank deposit and thus should not be considered as alternative of normal time deposit. In the event of any inconsistency between the English and Chinese versions of these webpages, the English versions shall apply and prevail.

 

Chinese Yuan Non-Deliverable Forward

Chinese Yuan Non-Deliverable Forward (CNY NDF) is a derivative product. The investment decision is yours but you should not invest in the CNY NDF unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.

 

Prior to investing in this product, Customer should carefully read the terms and conditions set out in the feature sheet for Renminbi Non-Deliverable Forward (“CNY NDF”) (including the Risk Disclosure Statements), together with any other terms and conditions or Customer agreements and other supplement to which the transaction may be subject. Please note that this product is not principal-protected, i.e. it does not guarantee the return of the entire amount of the principal at the end of the investment. Customer bears risk of loss should the exchange rate between CNY and USD (or other specified currencies) changes between the time the transaction is entered into and the settlement date. The risk of loss in investing in CNY NDF can be substantial. You may sustain losses in excess of your initial margin funds. Placing contingent orders such as “stop loss” or “stop limit” orders, will not necessarily limit losses to the intended amounts. Market conditions may make it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the required funds are not provided within the prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in your account. You should therefore carefully consider whether such investment is suitable in light of your own financial position and investment objectives. The CNY NDF market is not particularly liquid and the bid-and-offer spreads are sometimes probably exceptionally high. In some cases, it may be difficult for Customer to enter into a transaction or square off the positions. When investing in this product, Customer will be expected to hold the contracts till settlement date.


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