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Capella Software Spotlight: Back-to-Back Trades

More and more companies are using back-to-back structures when they trade FX contracts.

In a back-to-back transaction, the parent company executes the trade with the outside counterparty, but a subsidiary has the underlying FX exposure. The parent, through a back-to-back trade, acts as the counterparty for the subsidiary’s hedge. These internal trades can be quite complicated, especially when multiple entities are involved. CapellaFX can handle these transactions. The subsidiary’s exposure is put into the system, and CapellaFX computes the necessary internal trades to create the hedge based on the parent’s counterparty trade. Because back-to-back trades can be complicated, we recommend that you contact your Hedge Trackers consultant before utilizing this functionality, or you think this type of execution strategy could be beneficial to you company.

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