Categorize Currency Settlement For Free

Your settlement currency is the currency in which your funds will be deposited into your business bank account. Depending on your account setup, you may only be able to settle in your home currency, or you may have the option to settle in multiple currencies.

A corporate FX transaction involves a bank, on behalf of their corporate client, paying for the currency it sold at an agreed rate to another bank and receiving a different currency in return for the funds being cleared and settled in the local clearings.

Cross-currency settlement risk is a type of settlement risk in which a party involved in a foreign exchange transaction sends the currency it has sold but does not receive the currency it has bought.

In forex (fx) trading, the settlement currency (also referred to as payment currency) is the second currency listed in the currency pair description (example: EUR.USD). The transaction currency multiplied by the exchange rate will indicate the settlement currency amount for the transaction.

Local Currency Settlement (LCS) is the settlement of bilateral transactions carried out by two countries using the local currency prevailing in each country. This policy aims to reduce dependence on the US dollar currency for bilateral trade transaction settlement and maintain the stability of the local currency value.

It is a type of settlement risk that occurs in a foreign exchange settlement where one of the parties of the transaction would send the currency that they sold, but they do not receive the currency that they bought.

Foreign exchange trades typically set- tle according to standardized settlement conventions, e.g., for spot or in two business days; for 30, 60, or 90 calendar days forward; and on the Wednesday following the third Monday of March, June, September, and December.