How do you calculate net open position in financial market?

Answer 1

Net spot position: all assets (gross of provisions for bad and doubtful debts) less all liabilities, including accrued interest, in the currency in question;

+ Net forward position, all amounts to be received less all amounts to be paid under forward exchange transactions, including currency futures and the principal on currency swaps not included in the spot position;

+ Irrevocable guarantees (and similar instruments) which are certain to be called;

+ Net future income/expenses not yet accrued but already fully hedged;

+ Profits (net value of income and expense accounts) held in the currency in question;

+ Specific provisions held in the currency in question where the underlying asset is in a different currency;

- Assets held in currency in question where a specific provision is held in a different currency;

+ The net delta (or delta-based) equivalent of options book, if this is the approach taken to

measurement of option risk (this method needs the authority's approval).

= Net open position (As indicated by Appendix I - C, for supervisory reporting purposes, separate

returns of long and short positions must be submitted to the authority).