FRA Notation

[mambovipi]

Can someone explain what a 3 x 6 FRA represents? Also in general how to interpret these?

 

[kochunni69]

settlement after 3 months on a 6 months loan starting on the day of settlement.

 

[getterdone]

3 means the length of the FRA, 6 represents total time
total time= length of FRA + time of LIBOR
ex.
a 90 day FRA with 90 day LIBOR is a 2X6 FRA

 

[getterdone]

a 90 day FRA with 90 day LIBOR is a 2X6 FRA
sorry should be
a 90 day FRA with 90 day LIBOR is a 3X6 FRA

 

[kochunni69]

I was wrong…

 

[mambovipi]

That still doesn’t make a lot of sense to me;
So you are saying that first number is the length of fra (in months i’m assuming) and the second is the total time.
so with 3x6 FRA; 3 months is the length of the FRA and 6 months is the total time however: 90 day fra with 90 day libor is 3x6 FRA?
Can someone just please clarify?

 

[heha168]

mambovipi Wrote:
——————————————————-
> That still doesn’t make a lot of sense to me;
>
> So you are saying that first number is the length
> of fra (in months i’m assuming) and the second is
> the total time.
>
> so with 3x6 FRA; 3 months is the length of the FRA
> and 6 months is the total time however: 90 day fra
> with 90 day libor is 3x6 FRA?
>
> Can someone just please clarify?
right

 

[Grimer]

mambo, the first number represents the length of time in 30 day denominations for the FRA itself, so for 3 it’s 90 days
the 2nd number = the length of time for the FRA + the length of time for LIBOR
so in your case it’s 3 + 3 = 6
you could very well have a 30 day FRA (1) + 90 day LIBOR (3) = 1x4 FRA

 

[mambovipi]

okay so what would 3 x 7 FRA mean?
3 month FRA….

 

[Dreary]

3 month FRA for a 4-month loan

 

[mambovipi]

Got it thanks