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These days we often hear the term derivative or structured product transactions in the banking world. Actually what is meant derivatives that? Before we know the derivative transactions, it helps us recognize some of the types of transactions in foreign currencies.

First, the Today currency transactions, ie transactions conducted on the same day with the use of currency movements on the day in question.

Second, tomorrow exchange transactions, or commonly called the transaction “Foreign Tom”. Now these types of transactions performed on the next day settlement. For example, on this day you buy dollars, and then the completion of the transaction (settlement) is done the next day.

Third, Spot transaction. This transaction dispute shall be settled two days later.

Well, for foreign exchange transactions conducted over two days, called the derivative transaction. Duration variety, there are more than two days, one week, three months, even a year. Derivative transactions are also commonly called the transaction “forward”.

If you’ve ever heard of structured products, it is a part or derivative of a derivative transaction. Derivative transactions are given the option (option) is what is called a particular structured product. There are various options. For example at the time of settlement later, there is the calculation of the agreed exchange rate, could also use a combination of interest rate calculation. This transaction is conducted on an agreement by the customer and the bank.

According to the Head of Financial System Stability Bureau of Bank Indonesia, Santoso Wimboh in this transaction, the customer should really pay attention to the existing paper agreement. No one knows the foreign exchange forward whether stronger or weaker. What determines how accurate is projecting how many customers the bank or the exchange rate so that if there are losses in the future can be minimized.