BAX Contract

What Does BAX Contract Mean?
A BAX contract is a short-term investment instrument that uses a Canadian banker's acceptance (BA) as its underlying security. The specific BA underlying the contract has a nominal value of C$1 million and a maturity of three months. The contracts are traded on the Montreal Derivatives Exchange.

Also known as a "banker's acceptance contract".

Investopedia explains BAX Contract
These contracts are great way for a company to hedge against a rise in interest rates. BAX contracts are becoming increasingly popular because they are a less expensive hedge than their over-the-counter competition, forward rate agreements. BAX contracts are also very liquid, flexible, and do not tie up credit lines.

Related Terms

Banker's Acceptance - BA
Derivative
Forward Rate Agreement - FRA
Hedge
Interest Rate Risk
Maturity
Nominal Value
More Related Terms

Related Links

Getting To Know The Money Market - If you need liquidity and safety on a sum of money, don't forgo potential interest by keeping the funds as cash.
Money Market: Banker's Acceptance - A banker's acceptance (BA) is a short-term credit investment created by a non-financial firm and guaranteed by a bank to make payment.
Compare Local Interest Rates - Search and compare the best checking and savings rates nationwide from Bankrate.com. Click Here!
A Beginner's Guide To Hedging - Learn how investors use strategies to reduce the impact of negative events on investments.
GFT Futures - Trade all futures markets with our award-winning software. Try it free today.
Explosive Gains In Forex – Learn what makes the currency markets move with your exclusive free report!
Free Futures Trading Package - The great free give away to serious futures traders. Includes a CD-ROM and book.
Question about futures? Lind-Waldock can help. - Our Lind Plus market strategists offer advice and tailor-made trading strategies in our free Ask a Broker Q&A reference guide.

Rate this Term: Your Rating: Overall Rating: Vote Now!