Determine What to Hedge, How Much, and Why
Take the heavy lifting off your treasury staff by tapping into Derivative Logic’s highly evolved currency hedging capabilities. Our in-depth Value-At-Risk analysis results in our clients improved ability to identify their net currency exposure while our trade recommendations help to hedge risk with the fewest possible trades.
Our Currency Hedging Services include:
Hedge Structuring Advice
Having the right hedge in place is critical. We provide extensive, unbiased exposure analysis and develop a menu of hedging choices that enable you to make an informed decision based upon your unique goals and objectives. Having independent, unbiased analysis ensures you obtain the most effective hedge available.
Despite what you may have been told by your hedge counterparty, the legal documents that govern your currency hedge are not “off-the-shelf” and are highly negotiable. We assist with the negotiations, either directly with your counterparty or in conjunction with your counsel.
Dodd-Frank Regulatory Requirements
Recent requirements, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act, have increased documentation and reporting burdens on hedgers. We provide expert guidance through the complexities of the regulatory landscape, ensuring compliance every step of the way.
Establishment of a Vetted Counterparty Pool
Having a financially sound party on the other side of your hedge is paramount in the event the hedge is exercised upon. Our decades of derivative experience gives us the ability to get “under the hood” with available counterparties and identify the financially strongest, giving you peace of mind that your hedging provider will be able to fulfill their obligations when called upon.
Price Negotiation and Best Execution
With the regulatory environment imposing great costs on banks, many have become reliant on low credit usage, high fee products – like foreign exchange – to fuel their earnings. Our internal pricing technology makes sure your hedging transaction doesn’t contribute to the bank’s bottom line more than it should. By using the same trading systems banks use, we are able to ensure pricing transparency and fairness.
We help our clients create the leverage needed to better negotiate pricing and hedge structure of the hedging transaction. Generally speaking, the more leverage, the better the hedge terms and pricing.
Hedge Accounting Documentation
It’s critical for publicly traded entities to clearly understand the earnings implications of hedging benchmark exchange rate risk, as well as changes in overall exposure. We assist clients with creating policy and accounting guidelines necessary for regulatory compliance with ASC 815 (formerly FAS 133).