Eurusd - Tarf

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Key Information Document

TARF

Purpose
This document provides you with key information about this hedging product. It is not marketing material. The information is required by law to help you
understand the nature, risks, costs, potential gains and losses of this product and to help you compare it with other products.

NOTE: This is a derivative product that is considered to be complex and potentially difficult to understand. Please ensure you have taken all necessary
steps to understand the risks and obligations that entering into this structure will place upon you and your business.

Product TARF
Manufacturer Western Union International Bank GmbH
Website www.business.westernunion.co.uk
Information 0800 026 0314
Regulator Financial Conduct Authority (UK) / Financial Markets Authority (Austria)
Document Date 29/01/2020

What is this Product?


Type This product is an over-the-counter (OTC) option structure
Objectives Hedging
Description: The Target Accrual Redemption Forward (TARF) is a Structured Option that allows the Buyer to hedge (buy/sell) their EURUSD requirement at an agreed Enhanced
Rate that is more favourable than the prevailing forward rate for a number of fixing dates. On each fixing date, a profit figure is calculated if the agreed independent
EURUSD reference rate is less favourable than the Enhanced Rate, and compared to a specified Target Amount. This can either be a monetary figure (e.g. £25,000)
or, more commonly, a number of ‘pips’ of out-performance versus the EURUSD rate. The TARF will continue until the total accumulated profit reaches the set
Target. Once the Target is exceeded the product is then considered redeemed and no further deliveries take place. Should the EURUSD rate be more favourable
than the Enhanced Rate on a fixing date, the client will be obligated to deal the maximum notional amount at the enhanced rate for that month.

Intended This product is only suitable for those corporate customers with a very high degree of experience of hedging currency risk. As the structure could terminate prior to
Customer expiry resulting in little or no protection, the buyer should be in a strong financial position and should also be employing other guaranteed hedge products as part of
their overall hedging strategy.

Term This Document assumes a term of 1 year, a typical duration for this structure type; however, the term of the contract will be agreed with you when entering into the
deal. Once agreed, the buyer retains the right to request cancellation of the contract prior to expiry on demand, although this will incur a cost (see below). Western
Union reserves the right to terminate the contract only in circumstances where the buyer is in breach of the contract terms, or becomes insolvent.

What are the risks and what could I get in return?


1 2 3 4 5 6 7 Be aware of currency risk. You will receive payments in a different
currency so the final return you will get will depend on the exchange rate
Lower Risk Higher Risk
between the two currencies. This risk is not considered in the indicator
shown across.
The risk indicator assumes you keep the product for 12 months. The
actual risk can vary significantly if you end your product at an early In some circumstances you may be required to make further payments to
stage and you may get back less. pay for losses. The total loss you may incur may significantly exceed the
amount invested.
You may not be able to sell your product easily or you may have to
sell at a price that significantly impacts on the performance of your If we are not able to pay you what is owed, you could incur significant
product. losses

However, you may benefit from a consumer protection scheme (see


The Summary Risk Indicator is a guide to the level of risk of this product section 'What happens if we are unable to pay you). The indicator shown
compared to other products. It shows how likely it is that the product does not consider this protection.
will lose money because of movements in the markets or because we
are not able to pay you.
We have classified this product as 7 out of 7, which is the highest risk
class. This rates the potential losses from future market performance at
a high level, and poor market conditions are likely to impact the
capacity to pay you.

For more information contact:


WUIB CHMs
0800 026 0314
[email protected]
Page 1 of 3
Classification: Western Union Confidential
TARF

Nominal Amount USD 100,000


Reference Spot Rate 1.1021

1 year
Scenarios 3 Years 5 Years
(Recommended)

What you might get back or pay after costs USD -311
Unfavourable Scenario
Average return/loss over nominal amount each year -0.31%

What you might get back or pay after costs USD 3,428
Moderate Scenario
Average return/loss over nominal amount each year 3.43%

What you might get back or pay after costs USD 9,686
Favourable Scenario
Average return/loss over nominal amount each year 9.69%
[NOTE: All figures are for illustration purposes only]

The table shows the money you could get back or pay over the next This product cannot be easily ended. This means it is difficult to estimate
1 year, under different scenarios, assuming a nominal value of USD how much you would get if you end before the recommended maturity.
100,000. You will either be unable to end early or you will have to pay high costs or
make a large loss if you do so.
The scenarios shown illustrate how your investment could perform.
You can compare them with scenarios for other products.

The scenarios presented are an estimate of future performance


based on evidence from the past and are not an exact indicator.
What you get will vary depending on how the market performs and
how long you keep the product

What Happens If Western Union is unable to pay out?

As counterparty to your Structured Option you are relying upon WUIB’s financial ability to fulfil its obligations to you upon maturity of the contract. As a
result you have counterparty risk. To aid in your assessment of this risk WUIB will provide you with a copy of its latest audited financial statements upon
request. You may request a copy of our most recent financial statements by emailing us at [email protected].
As credit institution, WUIB is member of the deposit guarantee scheme “Einlagensicherung der Banken & Bankiers Gesellschaft m. b. H“ with the address
Börsegasse 11, 1010 Wien, which is in charge of investor compensation as well. More information on the organisation of the Austrian deposit protection
and investor compensation scheme can be found at:
http://www.einlagensicherung.at

What are the costs?


The Reduction In Yield (RIY) shows what impact the total costs you pay will have on the performance of the product. The total costs take into account one-
off, ongoing and incidental costs.
The amounts shown here are the cumulative costs of the product itself, for three different holding periods. They include potential early exit penalties. The
figures assume a nominal value of USD . The figures are estimates and may change in the future.

Costs over time


If you end after 3 If you end after 5
Nominal Amount USD 100,000 If you end after 1 year years years

Total Costs USD 450 USD 1,250 USD 2,050

Impact on Performance 0.45% 1.25% 2.05%

The table shows how the impact the different types of costs have on what you get back at the recommended holding period and what the different cost categories mean.

For more information please contact:


WUIB CHMs
0800 026 0314
[email protected]
Page 2 of 3
Classification: Western Union Confidential
TARF

Composition of Costs
The table below shows:
- The impact each year of the different types of costs on the investment return you might get at the end of the recommended holding period
- What the different cost categories mean

Entry Costs 0.45% The Impact of the costs already included in the price.
One-Off Costs
Exit Costs 0.00% The impact of the costs of exiting your product when it matures

The impact of costs of us buying and selling underlying


Portfolio Transaction Costs per year 0.00%
investments for the product
Recurring Costs
The impact of costs that we take each year for managing your
Other ongoing costs 0.00%
products

This is the maximum cost you may pay to end your product
Incidental Costs Early Exit Fee 3.00% before the maturity/expiry date. This is in addition to any
gains/losses arising from movement in the underlying market

* Cost of credit is determined by our assessment of your credit worthiness. This assessment will lead to an internal rating from A to D with the lowest
credit charges for A rated customer. The above costs assume a rating of D.

The Early Exit cost is the charge we will make to close out of your positions either at your request or as a result of your default (see T&Cs for more detail).
This will either be added to any loss or deducted from any profit resulting from the market cost of closing out of your contract.

How long should I hold it and can I take my money out early?
Recommended holding period 1 year

The recommended holding period is the duration of the OTC product as agreed in the individual contract. For this product, a holding period of 1 year is
quite common and so has been used as the example; however, if you buy this option the duration should match your underlying cash flow requirements.
There is no minimum holding period per se, but the product performs better when held for at least 1 year and the maximum is 24 months.

In general, the option should be held until the maturity date; however, it can be ended early at your request.
Depending on the market value of the product there may be a gain or loss to you at the point of ending the product. This will be in addition to the Early
Exit Fee listed in the table above.

How can I complain?


We have established procedures and policies to ensure that any complaint you may have is properly considered and appropriate measures are taken to
address any issues. If you have a complaint, you can raise it with us by: (i) e-mail at: [email protected]); or (ii) telephone at 020
7426 4460; or (iii) visiting us in person at our offices (please see Section 13 of this FSG for our office address), or (iv) writing to us at our Main Office
Address : 131 Finsbury Pavements, London, EC2A 1NT
Any complaint you make will be handled in accordance with our complaints handling procedures, copies of which are available from your Corporate
Hedging Manager or on our website:
http://business.westernunion.co.uk/Risk-Management/FX-options/MiFID

Other Relevant Information


Further information on this product, as well as the others that we offer are available in our Product Disclosure Statement. This can be obtained by calling
us on 0800 096 0314 or may be downloaded from our website:
http://business.westernunion.co.uk/Risk-Management/FX-Options

This Key Information Document has been prepared and approved by Western Union International Bank GmbH, UK Branch. The information contained within this document does not constitute financial advice or a financial
recommendation, is general in nature and has been prepared without taking into account your objectives, financial situation or needs. Western Union Business Solutions is a business unit of the Western Union Company and
provides services in the UK through Western Union’s wholly-owned subsidiary, Western Union International Bank GmbH, UK Branch (WUIB).

This Key Information Document has been prepared solely for informational purposes and does not in any way create any binding obligations on either party. Relations between you and WUIB shall be governed by the applicable
terms and conditions. No representations, warranties or conditions of any kind, express or implied, are made in this Key Information Document.

WUIB (Branch Address: 131 Finsbury Pavement, London, EC2A 1NT) is a branch of Western Union International Bank GmbH (registered in Austria, company number FN256184t, with its registered office at The Icon Vienna (Turm
24), Wiedner Gürtel 13, 1100 Vienna, Austria), which is licensed by the Austrian Financial Markets Authority (Österreichische Finanzmarktaufsicht). WUIB is subject to limited regulation by the UK Financial Conduct Authority and
Prudential Regulation Authority. Details about the extent of WUIB’s regulation by the Financial Conduct Authority and Prudential Regulation Authority are available from WUIB on request.

Classification: Western Union Confidential

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