Risk Products

OTC Derivatives
Over the Counter

Exchange Rate and Interest Rates

Characteristics of the Derivatives Market

At Monex we operate Derivative products in the OTC (Overt-the-counter) market where all operations are customized based on the requirements and specific financial needs of our customers (such as amount, underlying factors and terms).

It offers different tools to manage, control or minimize financial risks.

Coverage (Hedging) or Investments.

Risk management.

What can be covered?

 

Exchange rate

Currency exchange rate risks due to imports, exports, royalty payments, dividends, foreign credit payments, among others.

USD/MXN,  EUR/USD, EUR/MXN, CAD/USD, USD/JPY, USD/CNY and more.

 

Interest rates (Libor, TIIE)

Credit or investment coverage due to variability of local or foreign rates.

 

Stock Exchange Indexes

IPC (Price and Stock Index from the Mexican Stock Exchange)

The financial derivative products offered at Monex are the following

Underlying: Exchange rate and IPC

Forwards:

Contracts that establish, in the present, the obligation to buy or sell in the future, a certain amount of an underlying asset at a determined fixed price. Entering into a forward contract does not imply an initial cost. Depending on your credit profile and  financial information, a deposit margin is requested as guarantee with the purpose of minimizing the risk of non-compliance.

Options:

Contracts that today grant the right (not the obligation) to buy (Calls) or sell (Puts) in the future, certain amount of an underlying asset, which can be determined by the client. A premium is paid for the right of this coverage.

Amongst others.

Underlying: Interest rates

Interest rate swaps

Exchange of interest rates (variable-fixed or fixed-variable) in the same currency to cover credits or investments. Entering into a Swap contract does not imply any initial cost.

Cross Currency Swaps

Exchange of a payment flow in a determined currency for another flow of payment in a different currency, to cover credits or flows at long term; there can be a simultaneous exchange of rates. Entering into a CCY Swap does not imply any initial cost.

Cap

Strategy that allows setting a roof over the interest rate, limiting the maximum cost of its debt and benefiting from a lowering-rate scenario. A premium is paid for the right of this coverage.

Floors

Strategy that allows establishing a floor under the interest rate, securing the minimum interest to receive by an investment, benefiting from a raise in the interest rates. A premium is paid for the right of this coverage.

Amongst others.

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