Corporate Foreign Exchange Services

We help companies effectively manage currency exposure and protect business margins.

We Develop FX Risk Management Strategies and Hedging Policies.

Whether you are an SME or large global group. We have extensive expertise in protecting business margins against FX volatility.

Spot Trades

It is vital to ensure you are achieving cost-effective, fast and secure transfers when exchanging currencies.

  • This is fundamental to our service to clients.
  • But only a small fraction of what we do.
  • Often exchanging at the best available price isn’t enough.
  • You may need a more strategic approach to managing FX exposure.
  • This is where we offer our clients value.

Forward Contracts

FX Hedging Policy

We Design, Build, Monitor and Implement FX Hedging Policies. From Concept to Implementation. We Can Assist all Types of Companies.

  • Simple to implement, maintain and monitor.
  • Agreed in writing.
  • Clear guidelines.
  • Approved by all parties.
  • Tested based on historical data.
Risk Management

An Effective FX Hedging Strategy Will Help Reduce the Impact of FX Volatility and Unfavourable Exchange Rate Trends.

  • We support every client in a personal and bespoke way.
  • We focus on specific individual needs.
  • We can utilise the full range of currency hedging solutions.
  • We help clients secure margins and costs.
Market Orders

Market Orders are Often a Useful Addition to an FX Hedging Strategy.

We help clients incorporate market orders into risk management strategies and hedging policies.

This reduces client time spent actively monitoring markets, using automated Market Orders which are live 24 hours a day.

Business FX

Business Foreign Exchange

If your company imports or exports products and services, then fluctuations in currency exchange rates will likely have an impact on profit margins. Your business goals may focus on exchanging currency at the current live FX rates. In this case you will likely be focused on securing the most opportune rates and equally achieving an efficient turnaround of funds, whether you are buying or selling currency and if you are funding your own currency accounts or paying a third-party beneficiary.

Alternatively, you may need to secure FX rates for future cashflows and requirements. In this case you will likely have forecasts of inflowing receipts of USD at intervals over the next 12 months or beyond. Fluctuations in exchange rates will have an impact on the value of those dollars versus your functional accounting currency GBP.

An example of future currency requirements would be an export service contract in USD. Your company agrees a contract with a customer over an extended period, such as 12 months. The contract may include stage payments every month or quarter resulting in a future inflow of USD over the next year.

In this example, your business would be impacted by GBPUSD exchange rate movements over the 12-month period. This can either be a positive or negative impact on the profit margin of the contract based on the direction of GBPUSD FX movements

You may prefer commercially to secure the contract from the outset to fix the business margin over the 12-month period. For example, you may fix monthly or quarterly forward contracts selling USD into GBP. Once your customer pays each USD increment, you then settle against the forward contract rate.

If there is some uncertainly around cash flow timings, you can secure forward contract on a window or open basis. This would allow for cash flow delays in the event either the customer pays later than expected or the contract is delayed operationally. In practice, rather than settling the forward contract on a specific date, you can settle over a time-period to help manage changes in USD receipt timings.

FX Hedging Strategies

Disadvantages of FX Hedging

The key downside of securing FX contracts is you are not always able to benefit from favourable movements in exchange rates over the period. For example, if you fix a forward contract selling USD into GBP over 12-months and the live market FX rate fluctuates favourably in comparison to the rate secured on the forward contract. You are committed to the contract rate and are unable to benefit from advantageous exchange rate movement in the live market.

Another disadvantage is credit considerations. When you fix a forward contract, you are committed to the amount and rate secured. There could be a considerable movement in the market exchange rate favourably. This means you could secure a better rate in the live FX market in comparison to the rate fixed via your forward contract. This may result in you needing to fund collateral or variation margin against the forward contract. Thus you would be tying up funds in FX hedges which could be used more productively in other areas of the business to fund growth.

Risk Management

Advantages of FX Hedging

The key advantage of FX Hedging is securing profit margins. If a contract was left unhedged and the live exchange rate moved unfavourably over the contract period. Then commercial margins will be reduced in line with the size of the unfavourable exchange movement.

Fixing a contract to secure profit margins provides certainty and allows businesses to guarantee commercial margins are secured when agreeing contracts over extended time-periods. This is particularly important if you are operating on smaller percentage margins versus the overall contract size. For example, if your gross profit margin on a contract is 10% and the FX is left unhedged. An unfavourable exchange trend could wipe out this commercial margin or even result in an overall loss on the contract.

Spot Contracts

Buy and Sell Currency

If you need to buy or sell currency and settle funds either within the same business day or up to 2 business days in the future, then Spot Contracts will be most appropriate for your requirements. A vital need will be fixing the most favourable exchange rate and turning funds around promptly if you would like to pay a supplier or receive funds into your own currency account.

This is fundamental to our business model. We can help you buy or sell target currencies at opportune times and proactively ensure you receive a prompt turnaround of funds to and from your own currency accounts or paying third party beneficiaries. A key part of our business is proactively monitoring your target exchange rates and helping you transact at opportune times in each case. We often incorporate automatic solutions such as Market Orders to help clients secure target prices 24 hours a day and immediately fix once specific exchange rates are available in the live market.

Market Orders

Automatic Target Orders

Actively monitoring your target exchange rates can be time consuming. Exchange rates are actively moving 24 hours a day and thus automatic solutions can help provide convenience. For example, you may place a target order selling EUR into GBP at a specific chosen target rate.

Market orders are active in the market for 24 hours a day and will automatically secure your target price once this rate is achievable in the live market. Orders are placed Good Until Cancelled, this means the orders will remain active in the market until they are executed, and the target rate secured. If the target rate has not yet been secured, you are able to amend the target price or cancel the order at any time.

Market orders are a helpful tool to take advantage of exchange rate volatility, allowing you to target opportune FX rates. Contracts are automatically secured once a desired rate becomes available in the live market. If your current process involves actively monitoring exchange rates and booking deals when you feel the rate is opportune. Often you might be in meetings, on phone calls or travelling to the office and home. FX rates also move out of hours when you are not working or sleeping. Automatic solutions help provide a convenient method of exchanging currencies on a timely basis without the need for manual intervention.

Market orders can be used to secure both Spot Contracts for immediate exchange and Forward Contracts. If you are aiming to add FX hedging cover at specific levels, then you can place automatic orders at these levels to fix Forward Contracts rather than manually monitoring FX rates and then quoting online, via phone or email to book the contracts at the live market price.

Forward Contracts

Single Price Forward Contracts

A forward contract allows you to secure future cashflows. For example, you might need to pay EUR suppliers over a 12-month period and sell those goods in GBP in the UK. Your suppliers may invoice on 30 or 90-day terms and thus you will want to secure the GBPEUR rate of exchange to fix your EUR costs and lock in commercial margins when selling to customers in the UK in GBP.

Fixed Forward Contracts

You can fix GBPEUR forward contracts for specific dates in the future. Once the maturity date arrives you will transfer GBP and exchange at the forward contract rate. The EUR funds can then either be paid into your own EUR currency account or paid directly to your third-party EUR supplier.

Window and Open Forward Contracts

If you are unsure of the exact timings when EUR funds will need to be paid or when GBP incoming funds will be received. Then you can secure Forward Contracts over a window start and maturity date which allows for settlement at any time during the window period. Alternatively, you can also secure open Forward Contracts such as a 90-day open Forward. This contract allows you to settlement at any time over the contract period helping manage changes in cash flow timings and offering settlement flexibility.

Corporate FX Options

FX Forward Options

A key disadvantage of Forward contracts is the inability to benefit from favourable FX rate movements over the contract period. For example, if you fixed a forward contract selling EUR into USD over 12 months and the exchange rate moved favourable over that time-period. You are committed to forward contract rate which is less favourable than could be secured if exchanging at the live market price.

Corporate FX Options are available to Elective and Per Se Professional Clients and we would need to determine appropriateness before discussing any specific products and solutions. The overall aim of Corporate FX Options, Structured Products and FX Derivatives is to help companies manage the risk of unfavourable exchange rate movements, whilst also allowing some degree of participation in favourable exchange rate movement.

If you are currently using FX Options for FX Risk Management or are investigating starting to introduce derivatives into your FX Hedging Strategy, then please kindly reach out for a discussion. FX Options are regulated products and thus client appropriateness first needs to be determined on an individual basis.

There are risks and disadvantages of using FX Options when compared to Forward Contracts. We can offer a balanced view of all FX solutions once appropriateness has been confirmed.

Contact Us

Reach out by phone or email.

We are always happy to help and there are no obligations to use our services.