Foreign Exchange Forwards
- The difference between the forward rate and the exchange rate at the date of the transaction should be recognized as income or expense over the life of contract
- The profit or loss arising on cancellation or renewal of a forward exchange contract should be recognized as income or expense for the period
- Fair value requires that underlying securities and associated derivative instruments be valued at market values at the financial year end
- At the point of buying or selling index futures, the payment made by the client towards Initial Margin would be reflected as an Asset in the balance sheet
- A profit or loss would arise at the point of squaring up. It would be recognized in the P&L account of the period in which the squaring up takes place
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