It represents a forward transaction where there is no exchange of funds on the maturity date, but only the difference between the outright forward foreign exchange rate and reference foreign exchange rate (usually the CNB's middle exchange rate), calculated on the contracted NDF amount, is calculated and paid. Product is mostly applied to protect the balance of foreign currency liabilities (amount of outstanding principal on foreign currency loan) on the date financial reports are created (quarterly or, usually, 31 December).