Synthetic agreement for foreign exchange

A synthetic agreement for foreign exchange (SAFE) is an over-the-counter instrument used to manage or take exposure to movements in the forward relationship between currencies over a specified period. A short-term currency-swap variant uses notional amounts and settles a calculated difference rather than exchanging the full principal at both dates. The precise settlement, reference rates, dates and quote convention depend on the contract; variants differ. It is distinct from an option and is not defined as simply purchasing a forward plus an option. Current AFM explicitly lists SAFEs; this label alone does not establish the same depth in a successor exam.