Foreign exchange trading is a transaction to convert a certain currency into another one.

In an effort to satisfy your demand for external trading, overseas investment and financing in foreign exchanges, the China Merchants Bank has developed a series of foreign exchange trading products so as to help you obtain in time the currency you need for international settlement, evasion of risk in exchange rates, normalizing your capital cost, or realizing foreign exchange preservation and appreciation.

Spot Trading

·	Referring to trading interactions that are completed on the next working day after a deal is clinched.
·	Case of Operation: Client A held some USD, but due to business need, he purchased Euro 200,000 from the China Merchants Bank on Thursday Feb. 5 at the rate of 1 Euro to 0.9000 USD; On Friday Feb. 6, client A transfers USD180,000 to the China Merchants Bank, and on the same day, the China Merchants Bank transfers Euro200,000 to Client A’s account.

Forward Transactions

·	Referring to foreign exchange transactions that are completed on previously agreed date, exchange rate and value after a deal is clinched. 
·	A forward transaction can be completed as much as 12 months after the deal, while those completed after 12 months are called super-forward transactions.

Foreign Exchange Swap
With foreign exchange swap, while selling currency A to purchase currency B on spot trading, one purchases current A and sells currency B on forward transactions. This is to evade risk and lower cost.

Foreign Exchange Options

·	Option is a transaction to buy or sell a right. An option contract defines the right to buy or sell a certain amount of primary assets of certain quality, on a certain day, at a certain price. The objects of option can be foreign exchanges, stock shares, bonds and bills, commodities, stock market indexes, or gold.
·	The trading of foreign exchange options is a newly emerging means of transaction in recent years. It is a sort of development of, and complement to the original means for foreign exchange value preservation. They fall in two categories: buy options and sell options. A buy option (right) means the buyer of this option has the right to buy from the bank a certain amount of foreign exchange at a certain rate on a future time. A sell option (right) means the buyer of this option has the right to sell to the bank a certain amount of foreign exchange at a certain rate on a future time. In order to obtain the aforementioned right to buy or sell, buyer of this option (right) has to pay certain fee to the seller of the option, which is known as Premium.
·	Foreign exchange option is both a means to preserve the value of foreign exchanges, and also a possibility to achieve earnings from the fluctuation of exchange rates. It is therefore very flexible.