Insights

A common assumption amongst finance and treasury professionals is that, by adding new foreign exchange (FX) counterparties, one increases competition, and by increasing competition, one gets access to better FX pricing. This initiative will provide a company with the opportunity to diversify their counterparty risk and access further credit for forward purchasing. However, the answer…

The question above is frequently asked by treasury professionals who are responsible for protecting their company’s revenues and profits from adverse fluctuations in exchange rates. Broadly speaking, the goal of a professional FX risk management strategy is to ensure that a company has downside protection in the event that currency markets move against them. When…

Introduction Since early last year, I have spoken to a large number of Finance Directors (FDs) and Treasurers who, at least at the outset of our discussions, have mistaken Bondford to be a foreign exchange (FX) brokerage. I can completely understand why they might think this, as the meaning of the word ‘independent’ is not…

Introduction On June 4th the European Central Bank (ECB) published a significant academic journal titled “Discriminatory Pricing of Over-The-Counter Derivatives” that we recommend as essential summer reading for corporate CFOs and treasury teams. Please see the journal link here, or for those keen to get to the point, please read the rest of this article…

Hedging currency risk with derivative contracts such as forwards and options can be extremely effective, as tenor and notional can be set to match underlying risk exposures. However, in some cases firms can reduce currency risk via ‘natural’ hedging.  In the simplest case this involves netting forecast foreign currency expenses against forecast foreign currency revenues. …

Most corporates doing business internationally are well aware of the impact exchange rate fluctuations can have on their cash-flow, profitability, and relative competitiveness. None more so than businesses operating on thin profit margins (2-3%) who lack reliability and predictability in their forecasts. For the Treasurer or CFO responsible for managing financial risk in these circumstances,…