TeachMeFinance.com - explain First, second and third of exchange
First, second and third of exchange -- It is the practise of
bankers who are sellers of foreign exchange to draw their bills
(bills of exchange or drafts) in sets, so-called sometimes in
duplicate and sometimes in triplicate.
The entire set is delivered by the seller to the buyer of exchange.
The first of exchange (the original bill) is forwarded
to the payee (the one to whom the amount of the bill is to be
paid) by one steamer, while the second of exchange (a copy of
the bill) is sent by another steamer for use in case the original
bill is lost or materially delayed in transit. If a third of exchange
(another copy) is made out it is sent to the payee by
a still different steamer or it may be retained by the buyer of
the exchange as a voucher. The payment of any one of the
bills extinguishes the set, or in other words, cancels the others.
About the author
Copyright © 2007 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.