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Project Brief – Equity Participation in TCX Investment Company


TCX is an SPV that will offer its shareholders the basic currency and interest rate derivatives in emerging markets. The derivatives will be simple products: forwards, forward rate agreements, and swaps. TCX’s most popular product is expected to be the cross-currency interest-rate swap which could be used by TCX investors, such as the Bank, to source local currencies (LCYs) for on-lending where issuing bonds in the local markets is impractical or less cost-effective. TCX will generally provide local currency instruments in two forms: deliverable and non-deliverable. Whereas the first includes settlement in local currency and therefore requires TCX to put in place local financial infrastructure and comply with local regulatory requirements, the other is settled exclusively in USD off-shore 4 and can be provided without any local presence. Either way, TCX bears the exchange and interest rate risks.

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