In terms of FX risk management, mark-to-market (MtM) is more than an accounting exercise – it is a practical tool for measuring fair value, anticipating liquidity needs, and ensuring transparency with boards, investors, and auditors.
Hedgebook offers corporate treasurers a comprehensive suite of tools to manage mark-to-market valuations effectively. By combining real-time valuations, centralised data, scenario analysis, and audit-ready reporting – Hedgebook helps treasurers maintain control over their FX exposures, make informed decisions, and meet compliance requirements.
A quick summary of how Hedgebook assists:
- Fast and accurate valuations
Hedgebook provides real-time, independent mark-to-market valuations for a wide range of FX instruments, including forwards, swaps, and options. This enables treasurers to assess the fair value of their hedging positions promptly and accurately. - Comprehensive reporting for compliance and strategy
The platform offers detailed reporting capabilities, including sensitivity analyses and supporting hedge effectiveness testing, to comply with IFRS 7, IFRS 9, IFRS 13 and US GAAP. These reports also aid in strategic decision-making by highlighting potential risks and opportunities. - Centralised view of Hedging positions
Hedgebook consolidates all FX contracts into a single, user-friendly interface, allowing treasurers to monitor exposures and assess the impact of market movements on their hedging strategies. - Scenario analysis and stress testing
The platform’s scenario analysis tools enable treasurers to model various market conditions and their potential impact on hedging outcomes, facilitating proactive risk management. - Streamlined Audit and Reporting Processes
Hedgebook simplifies the audit process by providing auditors with independent, third-party valuations and comprehensive documentation, ensuring transparency and compliance with regulatory standards.
Now, if you would like to know more, let us get into the detail
Fast and accurate valuations
In dealing with constantly changing FX markets, having access to real-time, third-party independent valuations can be ‘business critical’. Hedgebook delivers this capability by providing accurate mark-to-market valuations for a broad spectrum of FX instruments.
This allows treasurers to assess the current value of their hedging positions instantly, facilitating timely decision-making and effective risk management.
For instance, Hedgebook’s Fast Forwards Valuation Tool enables brokers to upload up to several thousand client positions at once and obtain accurate valuations within minutes. This efficiency is particularly beneficial in fast-paced market environments where timely information is essential.
Comprehensive reporting for compliance and strategy
Hedgebook’s reporting functionalities extend beyond basic valuations. It offers detailed sensitivity analyses and aids hedge effectiveness testing, which are vital for compliance with IFRS 7, IFRS 9, IFRS 13 and US GAAP.
These reports provide insights into how changes in market conditions, such as fluctuations in exchange rates or interest rates, can affect the value of hedging instruments and the effectiveness of hedging strategies.
By leveraging these comprehensive reporting tools, treasurers can ensure their accounting practices align with regulatory requirements while also gaining strategic insights to inform decision-making.
Centralised view of hedging positions
Managing multiple FX contracts across various banks and currencies can be complex. Hedgebook simplifies this by consolidating all FX contracts into a single, user-friendly interface. This centralised view allows you to monitor exposures, assess the impact of market movements, and evaluate the effectiveness of your hedging strategies in real-time.
For example, Rockit Global, a company managing hundreds of millions of dollars in FX risk, uses Hedgebook to capture all of its FX contracts in one view, enabling efficient management of contract risk and mark-to-market reporting.
Scenario analysis and stress testing
Proactively managing FX risk requires anticipating potential market scenarios and understanding their impact on hedging outcomes. Hedgebook’s scenario analysis tools facilitate this by allowing treasurers to model various market conditions and assess their effects on hedging positions.
The platform’s sensitivity reporting capabilities enable treasurers to understand how changes in exchange rates or interest rates can influence the value of their hedging instruments. This foresight aids in making informed decisions and adjusting strategies to mitigate potential risks.
Streamlined audit and reporting processes
Ensuring transparency and compliance with regulatory standards is a fundamental aspect of treasury management. Hedgebook supports this by providing auditors with independent, third-party valuations and comprehensive documentation. This streamlines the audit process and ensures that all valuations are accurate and compliant with regulatory requirements.
Hedgebook’s valuation tool is recognised for its accuracy and efficiency, making them a valuable resource for auditors conducting reviews of derivative positions.
So, what is next in terms of your mark-to-market journey?
If you’re a Hedgebook customer and not already leveraging the mark-to-market capability then reach out to your account manager and we will show you how to best manage this for your account.
If you’re new to Hedgebook then a short online demo is a great way for us to show you exactly how this will work for you – you will be surprised at how something so complex can be made so straight forward.
