Products | TCX The Currency Exchange Fund

By providing hedging instruments, TCX facilitates the establishment of a local currency business line for its investors and their clients.

Products can be structured to respond to the specific situation of each counterparty, and the specific terms the underlying transactions these instruments serve to hedge.

Cross currency swaps are typically used to mirror the cash flows of a fixed income transaction like a loan:

• TCX can hedge the lender, who can then provide a local currency loan to the borrower; or
• TCX can hedge the borrower, who can then accept a hard currency loan from the lender.

Forward contracts can also be used for these purposes, and also to hedge longer term equity investments.

Another choice concerns the type of rates underlying the cash flows:

• Floating Rate (Floating vs. Floating or Floating vs. Fixed)
• Fixed Rate (Fixed vs. Fixed or Fixed vs. Floating)

A third choice concerns the type of local currency structure:

• Non Deliverable Contract (Synthetic Local Currency Loan) where all cash flows occur offshore and are settled in USD; or
• Deliverable Contract (Conditional Domestic Local Currency Loan) where all cash flows occur locally and in the actual currency of the obligation.

These structures are detailed in the section "Guide Books', with a special focus on the more complex deliverable structures.