Onshore/Offshor

e Financial
Instruments
Financial Management

Members

Madhura Kadimdivan

Sharanya Nair

Amol Sagar

Prajakta Mhatre

Sojan Somu

FINANCIAL INSTRUMENT

Adocument(such as a cheque,draft,bond,share,bill of exchange,

futuresoroptionscontract) that has amonetary valueorrepresentsa
legally enforceable (binding)agreementbetween two or
morepartiesregardingarighttopaymentofmoney

A real or virtual document representing a legal agreement involving

some sort of monetary value.

In today's financial marketplace, financial instruments can be

classified generally as

equity based, representing ownership of the asset, or

debt based, representing a loan made by an investor to the owner of

the asset.

National Instruments

Cheque : A written, dated and signed instrument that contains an

unconditional order from the drawer that directs a bank to pay a
definite sum of money to a payee

Equity : Equities are an asset class within several offshore financial

institutionsand expat bank accounts.

Debt : Documentthatserves as a legally enforceableevidenceof

adebtand thepromiseof its timelyrepayment . For eg bill of
exchange , bonds , certificate of deposit

Futures:- Commoditiesorsecuritiescontracted fordeliveryat

a stated future date at a specifiedprice. Such
acontract(calledfutures contract) itself can also betraded.

Bill of Exchange : A written, unconditionalorderby

oneparty(the drawer) to another (thedrawee) topaya
certainsum, either immediately (asight bill) or on a fixed
date , for payment of goods and/orservicesreceived

Financial Instruments held in offshore accounts

Offshore bank accounts provide individuals seeking

analternative investmentopportunity or different avenue of
financial management to improve theirfinancial
planningoptions.

Financial instruments held within expat bank accounts often

include products that's value is based on market forces, or
pre-determined contracts that offer lower interest rates and
costs.

The potential benefits of offshore banking outweigh those of

more restrictive banking regulation and policy. This is
achievable via a range of products.

CFDs

Contracts for difference such as currency pairs, equity swaps

and similar financial instruments are in effect derivative
financial securities.
These products provide traders an opportunity to capitalize
on price movements without actually having to hold the
underlying asset.
In some cases these CFDs are purchased using capital
leveraging or margin. In other words, a credit account is used
in addition to the primary fully funded offshore account.

Funds

Funds come in many shapes and sizes, and are either directly
managed by offshore banks, or traded with their services.
Bond funds, exchange traded funds, and mutual funds are just a few
of the fund types that are held withinexpat bank accounts.
Additional funds such as hedge funds, money market funds and fixed
income funds are examples of others.
These funds are either maintained independently through a trust
established at an international bank, or managed with the assistance
of financial service professional.

OTCs

Over the counter securities trading services are available via

select offshorefinancial institutions.
These include pink sheets, another term for stocks not traded
on larger exchanges. Collateralized debt obligations are
another type of OTC exchanged through offshore accounts.
Essentially, if it is not traded via a major formal exchange that
is regulated by a particular organization, then financial
instruments are considered OTCs.

Equities

Equities are an asset class within several offshore financial

institutionsand expat bank accounts.
Moreover, stocks that are not over the counter can be traded via
accounts at offshore banks.
This is because when the offshore bank has a headquarters in the
domicile of residence, the trading networks are interlinked enabling
offshore securities trading.
Stock options or stock derivatives, are also available via some
offshore banks.

CDs

Certificate of deposits are able to yield as high as eight percent or

more at select offshore financial institutions.
Specific rates are determined based on deposit amount, location,
term and applicable banking policy.
These rates are above and beyond some of the best international CD
rates available, and this makes these negotiable instruments an
attractive investment opportunity.
Additionally, offshore banks do not necessarily withhold interest
income tax due to differences in regulatory requirements.

Bonds

Due to the fact offshore accounts are located in foreign jurisdictions, they
are not subject to the monetary decisions of other banks in larger
jurisdictions.
It is for this reason, interest rates on loans from offshore banks are able to
be more competitive.
For example, offshore bonds that cost less to underwrite are better able to
offer higher yields to lenders or investors.
Similarly, just as loans are made, debt instruments such as international
treasuries, corporate debentures and convertible bonds are also held or
purchased within offshore accounts.

Global Depository Receipt

Aglobal depository receipt(GDR), also known

asinternational depository receipt(IDR)

is a certificate issued by adepository bank which

purchasessharesof foreign companies and deposits it on
theaccount.

They are the global equivalent of the originalAmerican

depository receipts(ADR) on which they are based.

GDRs represent ownership of an underlying number

ofsharesof a foreign company and are commonly used to
invest in companies from developing oremerging marketsby
investors in developed markets

Characteristics

it is an unsecured security

it may be converted into number of shares

interest and redemption price is public in foreign agency

it is listed and traded in thestock exchange

Foreign Currency Convertible Bond FCCB

A type of convertible bond issued in a currency different than

the issuer's domestic currency.

In other words, the money being raised by the issuing

company is in the form of a foreign currency.

A convertible bond is a mix between a debt and equity

instrument.

It acts like a bond by making regular coupon and principal

payments, but these bonds also give the bondholder the
option to convert the bond into stock.

Eurocommercial Paper

Ashort term,unsecuredloan issuedbyacorporationinacurrency

otherthantheoneinwhichthecorporationoperates.

Corporationsissueeuro commercial papers in order to tap into the

internationalmoney marketsfortheirfinancing.

Likeother commercial papers,euro commercial papers are rarely

for a
termlongerthanafewmonthsandtheyareusuallyissuedatadi
scount.

Anexampleofaeuro commercial paper is a British firm issuing

debt in U.S. dollarstoencourageinvestmentfromdollar
investorsin internationalmoneymarkets.