FX Hedging Rules

Start > Settings > Setup > FX Hedging Rules

In FX Hedging Rules the groups Hedging policy can be set up. It can be one or several rules depending on how the policy is designed. 

There could be several rules and all rules will be applied in order. To add a rule press the + sign and then start to add the different options below.

Name- Choose a suitable name

Description-to describe the rule

FX Exposure setting- There are three options available, 

• Back-to-back: will suggest FX deals based on each exposure deal, will not net any deal.  
• Net within rules: Will net by legal entity, currency and hedge date (payment date, start/end of time bucket for example within one rule). 
• Net all rules: will suggest deals based on deals netted on all rules entered in FX heding rules. 

Selection- make a selection that will include all exposure and FX hedges that should be taken into account when calculating the FX hedging percentage. 

Hedge Currency—You should choose which currency to hedge against. You can choose the accounting currency or a specific currency. 

Internal/external  - External means that the suggested deals will be hedge with an external counterpart via a trading station.  Internal means TS will create an internal FX request (that also can be uploaded to trading station for pricing).

Date rolling behavior—if the maturity date is on a holiday, this setting decides which day the suggested deal's maturity date will be: Preceding=the day before, Following=the day after the holiday. This is because some trading stations will not execute the deal if it is on a bank holiday. 

Bank holiday calendar—Should any other bank holidays besides the ones in the currency pair, e.g. USD, be considered?

Create deal as status- New or Approved, If the deal suggestion has status new it needs to be approved by a trader before it is sent to the trading station, if it has status approved it can be sent automatically. If combined with Condition expression below it can be based on the amount. All suggestions above 100 MSEK needs to be manually approved by trader. 

Trading station - Choose a trading station. 

Upload trade type: select Single or Block trades, Block trades means that all FX deals uploaded with same currencies on same time will get the same FX spot rate and same counterparty but with different swap points depending on maturity. The advantage is that there are not many deals with different FX spot rates and with different counterparties. If singel is choosen each FX forward will be done with different FX spot rates and different counterparties. 

Trading of deals if Block trade: If it's an internal deal, All deals with the same counterparty (internal bank) will be traded in the same block. If it's an external deal suggestion, all deals with the same Legal entity will be traded in the same block. 

Condition Expression- Conditions on amount, currency and maturity date could be set. For example,e if you want a maximum or minimum amount of the suggested trades. 

The example below shows that deals equal to or above 20 000 000 need approval before they are sent to a trading station. Deals below 20 000 000 will be approved automatically.