Automation, “algo trading” and a tighter regulatory environment are driving change in the industry

 

Author: Gordon Platt

BEST BANK FOR CORPORATE CURRENCY HEDGING Continued...

CORPORATE CURRENCY HEDGING

Citi

Corporations operating internationally typically protect themselves from currency volatility using forward contracts, options and swaps. CitiFX Pulse, the bank’s online FX hedging platform, enables multinational corporations to track cash flow and balance sheet exposure to currency fluctuations, with associated hedges, across subsidiaries. Citi also helps corporations assess and quantify financial risks from FX exposure before implementing hedges. CitiFX Pulse provides access to 700 currency pairs.

CASH FLOW HEDGING

HSBC

Changes in exchange rates cause changes in a multinational company’s cash flow, both in terms of outgoing payments and incoming revenue. HSBC helps companies manage these risks with customized programs. The bank’s solutions are designed for the specific risk profile of individual corporations. The hedging programs also take into account local business practices, changing regulations and the existing financial infrastructure.

BALANCE SHEET HEDGING

Societe Generale

Societe Generale Corporate & Investment Banking (SG CIB) advises multinational corporations worldwide on hedging their balance sheets (assets and liabilities) to reduce risks from currency exposure. With its powerful FX platform and global reach, SG is able to handle extremely high volumes with ease. Its market risk advisory group advises corporate clients on strategic transactions, including the contingent hedging of FX risk in cross-border mergers and acquisitions. SG CIB also structures long-term hedging solutions using cross-currency swaps.

FX OPTIONS

Societe Generale

Societe Generale has been steadily increasing its FX options market share with corporate clients in recent years and is now the global leader. SG hedges complex exposures for corporates using the expertise of teams of financial engineers. Corporations are increasingly turning to combinations of options to manage their currency risk in a market characterized by episodes of high volatility. SG also offers advice on hedge accounting related to the needs of specific clients.

FX FORWARDS

Bank of America Merrill Lynch

FX forward contracts are the most commonly used currency-hedging instrument for corporations. These contracts involve an exchange of different currencies on a predetermined date. The exchange rate is agreed and fixed at the outset. The parties to the agreement do not need to make any payments until the transaction date. Bank of America Merrill Lynch is a leading global provider of spot and forward currency trading.

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