What is a foreign currency contract?

A foreign currency contract is a contract that:

• Requires delivery of a foreign currency that has positions traded through regulated futures contracts (or settlement of which depends on the value of that type of foreign currency)
• Is traded in the interbank market, and
• Is entered into at arm's length at a price determined by reference to the price in the interbank market.

Bank forward contracts with maturity dates longer than the maturities ordinarily available for regulated futures contracts are considered foreign currency contracts as long as the conditions listed above are met.