What Is the Full Form of AD in Banking?

The Full Form of ‘AD’ in Banking is ‘Authorized Dealer’.

Full Form of AD

The full form of “AD” in banking is “Authorized Dealer”. Authorized dealers are licensed by the government to buy and sell foreign currency, including coins and notes. They also offer services such as exchange rate and risk management advice, currency conversion, payments and transfers.

An authorized dealer (AD) is an institution that is authorized by a central bank or regulatory body to buy and sell foreign currencies. ADs are the main participants in the foreign exchange market, accounting for more than 90 percent of all foreign exchange transactions. Therefore, they play a crucial role in facilitating international trade and investment activities.

In order to become an authorized dealer, a company must meet certain criteria set by its country’s regulating body. This includes having sufficient capital resources, a satisfactory credit rating from reputable financial institutions, adequate liquidity levels, established procedures for managing financial risks, and compliance with all applicable laws and regulations. The company must also demonstrate its ability to manage customer money safely and professionally.

ADs typically provide their customers with various services related to foreign exchange transactions. This includes providing advice on current exchange rates, helping customers select which currency pairings would be most beneficial for them in terms of their particular financial goals, conducting trades on behalf of clients in accordance with their instructions, offering hedging strategies to reduce exposure to risk associated with currency fluctuations, providing access to inter-bank markets for more competitive pricing on large orders, carrying out due diligence checks prior to executing trades on behalf of customers etc.

In addition to facilitating foreign exchange transactions between customers and other market makers or banks around the world (known as ‘inter-bank’ trading), authorized dealers may also provide various other services such as margin trading facilities for institutional investors; spot trading services; forward contracts; options; swaps; futures contracts; structured products etc., depending upon the specific service offering of each AD.

Authorized dealers are subject to stringent oversight by regulatory bodies around the world which ensures that they adhere to sound practices when dealing with customers’ monies and safeguarding against any potential misuse or misappropriation. As such they are considered reliable partners when it comes to conducting quick and secure international payments/transactions at competitive prices while adhering strictly to applicable laws and regulations..

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