Common use of Foreign Exchange Trading Clause in Contracts

Foreign Exchange Trading. Foreign exchange transactions involve multiple risks, including currency risks and settlement risk. Economic or financial instability, lack of timely or reliable financial information or unfavourable political or legal developments may substantially and permanently alter the conditions, terms, marketability, or price of a foreign currency. Profits and losses in transactions in FX will also be affected by fluctuations in currency where there is a need to convert the product’s denominations to another currency. Time zone differences may cause several hours to elapse between a payment being made in one currency and an offsetting payment in another currency. Relevant movements in currencies during the settlement period may seriously erode potential profits or significantly increase any losses. Engaging in foreign exchange (FX) trading (buying one Currency in exchange for another) exposes you to the risk of adverse changes in exchange rates. Exchange rates can be volatile and are driven by a variety of factors affecting the economies of the jurisdictions whose Currencies you are trading.