Direct Currency Calculation (2024)

When stocks are exchanged using different currencies and one currency is the official currency of the country where the exchange quote is given, a direct exchange can be performed.

In order to perform a direct currency calculation, the following four pieces of information are required.

• Originating Currency: the three letter currency code the amount is currently in.

• Amount: a decimal that contains the number of units of Originating currency to be converted.

• Target Currency: the three letter currency code the amount will be converted to.

• Market Maker: the market maker that is being used for the current company or plan.

• Exchange Date: the date that will be used to locate the exchange rate the system will use in the conversion exchange calculation.

Steps to Perform a Direct Currency Calculation

1. Retrieve the exchange rate for the Originating currency and the Target currency supplied by the current Market Maker.

   • Search the AsExchangeRate table for a single instance that contains the Originating currency as either the BASE or TERMS currency, and the Target currency as either the BASE or TERMS currency, for the current Market Maker. If rows exist, get the row that has the most recent effective date or the date specified in the optional Exchange Date variable. If the Exchange Date is specified, an error is returned if no rate exists for the specified date.
   • If no rows exist in the AsExchangeRate table for Originating and Target currency, a cross rate calculation will need to be performed.

2. Retrieve the DirectTermIndicator for the current Market Maker and whatever currency is the TERMS currency from the Exchange Rate retrieved from the AsMarketMakerCurrency table.

• If DirectTermIndicator is T, then direct, or American, terms are used in the quote. The quote is the number of BASE currency units needed for one unit of the TERMS currency.

• If DirectTermsIndicator is F, then indirect, or European, terms are used in the quote. The quote is the number of TERMS currency units needed for one unit of the BASE currency.

• If the Target currency is the TERMS currency in the exchange rate, then the conversion is done by using the amount of Originating currency to BUY some number of BASE currency from the Market Maker. This is done using the following formula:

1. If Indirect: Amount * Offer Price = Number of units of Target Currency

2. If Direct: Amount / Offer Price = Number of units of Target Currency

• If the Target currency is the BASE currency in the exchange rate, then the conversion is done by using the amount of Originating currency and SELLING it for some number of TERMS currency from the Market Maker. This is done using the following formula:

1. If Indirect: Amount / Bid Price = Number of units of Target currency

2. If Direct: Amount * Bid Price = Number of units of Target currency

4. Retrieve the CurrencyRoundPlaces and CurrencyRoundMethod values from the AsCurrency table for the Target currency and round the result. Rounding is described in detail later.

Examples of Direct Currency Calculation

Exchange Rate Indirect Quote, USD/CAN

• BASE Currency = USD

• TERMS Currency = CAN

• OFFER = 1.0018

• BID = 1.0020

If converting 100000 USD to CAN then:

• Originating currency = USD (the BASE currency in this example)

• Target currency = CAN (the TERMS currency in this example)

• Amount = 100,000

• Currency Conversion = 100000 * 1.0018 = 100180.0000 CAN

If converting 100000 CAN to USD then:

• Originating currency = CAN (the TERMS currency in this example)

• Target currency = USD (the BASE currency in this example)

• Amount = 100,000

• Currency Conversion = 100000 / 1.0020 = 99800.3992 USD

Exchange Rate Direct Quote, USD/CAN

• BASE Currency = USD

• TERMS Currency = CAN

• OFFER = .9985

• BID = .9982

If converting 100000 USD to CAN then:

• Originating currency = USD (the BASE currency in this example)

• Target currency = CAN (the TERMS currency in this example)

• Amount = 100,000

• Currency Conversion = 100000 / .9985 = 100150.2254 CAN

If converting 100000 CAN to USD then:

• Originating currency = CAN (the TERMS currency in this example)

• Target currency = USD (the BASE currency in this example)

• Amount = 100,000

• Currency Conversion = 100000 * .9982 = 99820 USD