A financial product (e.g., quanto option, quanto cap, etc.) that converts underlying asset prices into units of the payoff currency (a currency in which the product’s payoff is defined in the contract) by applying a certain exchange rate (the quanto factor).

Quanto products may be classified as plain vanilla (quanto option) or exotic products (e.g., a quanto basket option in which one or more of the underlying assets in a basket (known as the quanto basket) are traded at a currency other than the currency denominating its payoff/ payout.