Feb 27, 2012

In Search of the Winning Hedging Strategy: A Look at Different FX Hedging Options

With 94% of the world’s Fortune 500 companies actively utilizing derivatives to hedge FX exposures, Udi Sela, Vice President of the Client Solutions Group at Numerix, explored various Corporate Treasury FX hedging strategies, observing that, “Derivatives are just like nuclear energy and can be used either to light your house, or to build a bomb.”

The benefits of employing carefully selected and implemented hedging strategies are clear, but what is the best way for an institution to scale its hedging program? What are some of the key things to think about when developing these strategies and putting a more dynamic hedging strategy in place for your organization?

“We can use derivatives in an intelligent way,” explained Mr. Sela, adding that you need to decide if you want to perform hedge accounting—or not—because it has its implications on your bottom line (in other words, do you want to take a mark-to-market hit on your hedge?) Other things to think about: Practitioners also need adequate tools to negotiate the best entry price, to perform mark-to-market, and to meet reporting and regulatory needs.

Download Udi Sela's article in gtnews on Heading FX Exposures: Which Strategy is Right for Your Business?

The above comments were from a recent webinar, “FX Hedging Case Study Example,” which included a case study of a large Swiss multinational company. Access the webinar replay now.

We are happy to explore further and answer any follow-up questions. Contact marketing@numerix.com for more information.

 

Blog Post - Sep 24, 2010

Implementing Change in Derivatives Regulations

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