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A Competitor Appeared to the Banks in Forwards

A Competitor Appeared to the Banks in Forwards

A competitor has appeared to banks in forwards, which will insure monetary risks cheaper to the companies.

JSC ForMeti works on a new platform of forwards. According to the company, forward transactions will be made electronically. Private individuals, as well as legal entities will have ability to apply application. Nika Shengelia, founder of the company, expects microfinance organizations at the first stage, these companies dislike banks’ commission fee – 8%, as it gets credit resource more expensive. However, they do not have other alternative now. ForMeti will offer this service at 0.2%. Minimum lot will be 500 units.

Forward transactions are made for different periods, one or a few weeks, one or a few months or years. The buyer of the currency and the seller are agreed on the established exchange rate earlier before the transaction.

Banks work with such scheme to the clients and ForMeti will have the analogue system, but merely in the part of hedging.  ForMeti will reimburse the difference caused by the rate delay. Before the end of the transaction, the buyer and seller will have to place funds up to 8% on the deposit account.

Nika Shengelia says that this is a letter of credit for the security of the parties if the transaction fails.