Derivatives

An FRA Settlement Amount

December 30, 2022
Banking

LOLR

December 30, 2022

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It stands for noon average rate contract, which is by definition an average rate option (ARO) or average rate forward contract which is traded in currency markets, where its underlying rate is calculated from the average rate prevailing at midday in the primary market for a respective instrument.

Originally, the noon average rate refers to the spot exchange rate of the Bank of Canada that is posted each business day by the central bank at midday.

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