Frequently Asked Questions
What does foreign exchange entail?
Foreign exchange is the settlement and arrangement of funds around the world by buying and selling currencies. More than 5 trillion in US dollars is exchanged daily by thousands of banks and foreign currency traders all over the world.
How do I protect myself against currency fluctuations?
The most effective way to manage the risk of currency instability is by purchasing foreign currency Cambridge Foreign Contracts. They enable you to lock into a specific exchange rate. You can use your Cambridge Forward Contract to make your payment on a specific date, or to make several payments over a series of dates in the future.
What is a Forward Contract?
Forward transactions involve a delivery date further into the future, possible as far as a year ahead. Our foreign exchange Account Representative agree to buy and sell currencies for settlement at least three days later at predetermined “locked-in” exchange rates. This type of transaction is often used by businesses to reduce their exchange rate risk.
What are the different types of Forward contracts?
There are two different types of Forward Contracts – a Closed Forward Contract and an Open Forward Contract. A Closed Forward is a contract in which the foreign exchange rate is fixed for value or settlement on a future date. This type of contract requires you to complete the transaction on the date it expires, also known as the value date at the previously agreed rate of exchange.
An Open Forward Contract lets you decrease your FX risk by setting a foreign exchange rate today for a future date value and settlement. Unlike the Closed Forward Contract, the Open Forward gives you an option to trade within the period specified on the contract. This way, you can escape the risk caused by market fluctuations. i.e. On November 3, 2014 you purchased a forward for $100,000 US at 1.17 against Canadian Dollars for a value date on January 3, 2015. In this case you have a trade on January 3, 2015 at a fixed rate of 1.17.
In contrast, an Open Forward sets a window of time during which the contract can be settled either in part or in full as long as the full contract has been paid by the value date. For instance, if you have a number of bills to pay, then you can drawdown any amount of the contract in order to satisfy your bill payments. However, any drawdown will be exchanged at the rate agreed upon with your Account Representative at the time of purchasing the contract.
What do companies use Forward Contracts for?
By buying or selling ( Forward Contracts) in the forward market, one can protect the present value of a particular currency from exchange rate volatility. You lock-in today’s exchange rates instead of a volatile currency exchange rate in the future that could significantly devalue your purchasing power.
Is there an advantage to buying or selling on specific days of the week?
No, because today’s international currency marketplace operates around the clock.
Are there extra fees for doing a Forward Contract as oppose to doing a SPOT deal?
We do not charge fees for doing any deal type. However, a 5% of the total contract amount is required for deposit when you engage in a forward contract.
Why are the rates charged by currency trading companies different from those published in the newspapers?
The currency exchange rates published in the newspapers come from international wire services which are based on the dealing price. With currencies being traded around the clock, those published rates will always be behind the actual dealing price.
How are currency values affected by interest rate changes?
Higher rates attract foreign investors in search of better returns. The resulting flow of money in or out of a nation’s economy will affect the value of that nation’s currency.
What is the difference between currency exchange and currency speculation?
We exchange currency. To do this, we help you manage the risk associated with exchanging one currency for another. And because this “buying and selling” of currencies on behalf of our clients is done on such as large scale, we pass the better exchange rates on to you. Currency speculation on the other hand is about day trading to make a quick buck. This is not what we do. The currency speculator is actually willing to take risk. As a commercial client this is precisely the risk you want to avoid.
How big is the foreign exchange market?
On average, the equivalent of about 5 trillion in different currencies is traded daily in the FX market around the world. Currency exchange transactions are typically done in amounts between $3 million and $10 million by banks, fund managers and currency exchange companies.
International Payments
Why should I use IMS and not a regular bank to make international payments?
There is no other service exactly like IMS. Our patented POC report is revolutionary in the marketplace. Our focus is transparency in international payments and foreign exchange. We give clients the attention they need, professional advice and the best exchange rates possible.
What is the difference between a Forward Contract and a Future Contract?
A currency exchange Forward Contract guarantees an exchange rate for transactions being completed at a future date or series of dates, Future Contracts are an investment option for a commodity such as heating oil.
Can a Forward Contract be terminated early?
Yes it can. But since there are fees associated with the transaction, it will involve extra fees.
Are there any hidden charges or fees for Forward Contracts or swaps?
No. Your costs are all spelled out in advance, so you quickly know exactly what you are expected to pay when you enter into the agreement.
What happens when I decide to cancel my deal?
If for any reason you wish to cancel a Deal that has been entered into, you must notify us immediately by contacting your personal Account Representative whose contact details are displayed on IMS Online or the Customer Support and Integration department who can be contacted via the information listed in the Support section of the User Guide. In certain circumstances, we may have the ability to cancel the Deal, and we will use its reasonable best efforts to cancel the Deal. However, you understand that once the Deal has been entered into, the Deal is your binding obligation and that the cancellation of any such Deal will be entirely within our sole and absolute discretion.
What is a wire payment?
A wire payment is an electronic method of transferring money from one individual or institution (company) to another. Wire payments are transferred in a manner that offers the ability to provide finality of payment once the payment is received by the recipient (Beneficiary). Wire payments are reliable, binding payments that provide immediate availability of funds. Proceeds of a wire payment are generally made available to the beneficiary by their bank on the value date specified on the payment.
What is an EFT (Electronic Funds Transfer) service?
An Electronic Funds Transfer (EFT) is a web-based funds transfer system which is an ideal solution to pay suppliers, employees and collect customer payments. EFTs can assist you to achieve more predictable cash flows and reduce costs. Unlike paper cheques/checks, EFTs also helps to mitigate the risk of fraud because payments cannot be lost, stolen or fraudulently altered.
What is the difference between wire & EFTs payments?
Electronic funds transfer (EFT) versus a wire payment.
EFT is a payment and collection service which offers clients the ability to process transactions within Canada. Clients can use this service to transfer Canadian and US Dollars. These payments are typically used for low volume and low value payments that are a low priority.
Wire payments are used for transactions both internationally and within Canada; which are funded in Canadian and US Dollars. Wire payments are most efficiently used for time sensitive payments that are low in volume and high in value.
What is the difference between a wire and a draft?
A wire is an instant electronic transfer of funds. A draft is the issuing of an international cheque/check.
What are the different types of wire payments?
There are two types of wires.
Commercial Wire Payment
What are the cut off times for wires?
To provide value for same day with central banks the settlement must be completed by a specified time. These times can vary by currency. If the payment is sent after the cutoff time for value that day, these payments must be valued for the next business day.
How do holidays affect wire payments?
On a bank holiday in Canada or the country where the currency of the payment is denominated cannot be value dated to the date of a holiday. For example, a USD wire payment cannot be value dated on Canadian or U.S. Thanksgiving.
How can I get my money in my hands now that my customer in Taiwan has unloaded my shipment?
With accounts in major banks in all major trading nations, we can collect your funds from anywhere in the world; and wire it to your account immediately.
What is routing information?
In order to get a wire payment to the beneficiary’s bank, at times it is necessary to route a wire payment through another bank. Depending on the bank selected more information may be required, however routing instruction will pre-fill. This defaulted information will remain with the wire payment. In the event that specific instruction is required, the beneficiary will typically advise of the information to be entered. Wire payments can have up to three banks specified in the routing information; these banks are identified in the following order: Receivers Correspondent, Intermediary Institution, and Beneficiary’s Bank.
I’m closing a major business deal in Los Angeles today.
Can I get the money there to seal the deal on time?
In the US, we can arrange same day settlement of your transaction. In Europe it normally takes 2 business days. In exceptional circumstances we can execute same day settlement in Europe, subject to certain limitations.
Account Representatives
How can I guarantee my suppliers will get their money on time?
Your Foreign Exchange Account Representative will ensure your funds settlement is tracked from order to delivery. This means that it arrives at your suppliers on time and confirmation is in your hands right away.
How can I set up an account?
You can call any of our offices and ask to speak with an Account Representative. Your Account Representative can set you up with either a General Account and/or an Online Account.
Please note; a General Account entitles you to use traditional methods of global payment. An Online Account entitles you to use our online tool. Existing clients must fill out an additional Online Membership Form to take advantage of our Online Services
Will my Account Representative assist me with any foreign currency transactions I make through Online Services, or am I on my own?
Using our Online Service, doesn’t mean that you get less service. Our Account Representatives will be there for you every step of the way. In fact, our Online Service frees them up to give you even more personal attention.
If I’m presently a IMS client, what are the advantages of going online?
By going online you will always have a direct link to your Account Representative. You will also have the added benefit of being able to access your account 24/7. Plus the ability to:
In 3 easy steps you can get a live quote and book a deal, send payment to your beneficiary and settle the funds
Receive and send immediate email confirmation of payment to your team and beneficiary
Search and review all order history at your convenience
Manage the compete setup of each user through ‘My Profile & Tools’
Do I need special software to use the Online system?
You do not need special software to start using payments Online, call your Account Representative or apply now and you can be up and operational today.
What are the minimum system requirements?
Microsoft Internet Explorer version 4.01 (or higher)
JavaScript Enabled
Java Enabled
Cookies Enabled
