Over the last decade and a half, improving Treasury and Accounting technology has allowed corporations to streamline operations, eliminate redundant work and markedly improve controls. This post will examine two key areas in which Treasury is benefiting from technological advances that were essentially unheard of as late as 2000: hedge accounting and derivative lifecycle management. […]
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 […]
Rolling contracts is a common practice – either due to changes in forecast or as part of a structured rolling program. This can create accounting complexities for designated hedges. First, new documentation must be prepared for the rolled-to contract, even though it is essentially a continuation of the previous hedge relationship. Also, when the contract […]
Are you a user of both Capella and FXAll? If so, did you know the two systems can “talk” to each other? By accessing FXAll from Capella, you can save significant time and prevent input errors. The two systems are fully integrated and provide for secure, pass-through processing. With just a few clicks of the […]
In the wake of the recent financial crisis and subsequent Dodd-Frank requirements, there has been an increased focus on risk and credit measurement in derivatives markets. This has caused the market to transition from the use of traditional LIBOR towards using the OIS (Overnight Indexed Swap) curve for discounting derivative cash flows. The OIS curve […]
There are many exposure types and an even greater number of hedge strategies that can be deployed to mitigate their potential risk. This article describes a basic framework for assessing which hedge strategies might best be suited to cover various exposure types. Essentially, this process comes down to a few relevant questions: