Re: Gain or loss on premature settlement

Hi Kamal,

If you are premature the contract

1. It is not compared with spot rate on that  date there will  be different  rate that need to confirmed with counterparty  (Bank).
2. Premature means you are settling the deal before the agreed value date, if value date is changed rate also will get changed according to the market, so at the time  of prematuring  the deal you will give  rate which is agreed with counterparty .
3. Premature deal all ways two deals :

               1.Forward contract (Transaction Type 102)

               2.Premature (Transaction Type 103)

               3.Netting. (Transaction Type 104)

1^St and 3^rd deal will be netted with forward rate which is booked initially and 2^nd deal you will settle with  counterparty.

Hope answered your query.