What is Deliverable Foreign Exchange?
Deliverable foreign exchange is a term commonly used on an institutional level and less frequently on a corporate or consumer level. Term means a currency exchange with a cash settlement to the account.
On an operational level, it looks as follows: the client initiates an exchange with a cash settlement to the account. This means that the provider will take, say, EUR and settle USD on the client's account. In between those two, the provider will be earning a spread (or a margin) on the transaction.
Usually foreign exchange is settled on a T+2 basis, or two business days after the trade date. Some offshore currencies are settled on a T+1 basis, for example, USD/RUB.
What Are First-to-First Party Payments?
For some financial clients, deliverable FX settlement can be done only to the same bank account or a bank account that is in the name of the same client requesting the exchange. This is also called "first-party payment". Some financial clients will have such a requirement due to the risks of money laundering.
This means that the client will be performing third-party payments with another provider after the cash settlement is done.
In addition to this, some providers can require a list of correspondent banks to check the risks of money laundering, and this is called "standard settlement instructions". So the provider will agree with the client prior to any transactions as to which banks will be used for the settlement of cash.
Deliverable Foreign Exchange Provider
Whether you’re paying your suppliers or employees around the world, buying assets overseas, or just looking to send money abroad, a trusted banking partner is always there to deliver the right solution for all your currency exchange needs.
Our banking partners specialise in managing FX and payments for international companies. They are ready to fulfill any specific requirements and minimise the effect of currency fluctuations on clients bottom lines.
If you are looking for deliverable foreign exchange services, reach out to us to get a list of the best-in-class foreign exchange service providers, and we will also help you get the best conditions.
Deliverable foreign exchange is simply currency conversion with a cash settlement to the account.