When to use zero-premium FX collar options as the method of hedging

If it is not wise to always hedge via zero-premium collar options and you should never pay a premium to buy outright call and put currency options – what is the right approach?

Auditors juggling FX

New Focus as Pressure Mounts on Auditors

Not only are companies struggling with the increased focus on exchange rates, but our auditors are also having to learn new tricks.

Businessman Looks At Lighthouse

Mark-to-Market Valuations Seen in New Light

For a long time, mark-to-market valuations were sent by your bank once a year, whether you wanted them or not. They might have been of interest, they might not. You might have felt compelled to…

Amazing colorful sunrise at sea

Why FX Valuations are Wasted at Year End

If the market dropped tomorrow, do you know your exact FX valuations and exposure today? Not just an estimate, an independently calculated position. With Brexit and Covid-19 bringing volatility to the market, UK companies are…

Sports cars at the harbor

Three Ways Hedgebook Helps Banks and Brokers Work Smarter

  Over the past few years, Hedgebook has worked closely with channel partners across the United Kingdom, Europe, the US and Australasia. We have learnt a lot about banks and brokers pain points when it…

British Naval Flag on Thames Clippers boat on River Thames, Canary Wharf, London, UK.

Surprisingly FX Management is Business-as-usual in UK

Last year the talk was all about Brexit. How UK companies needed to better manage foreign exchange risks due to uncertainty and subsequent volatility in the currency markets. We all know what the talk currently…

Financial Instruments

The conundrum of materiality and financial instruments

As a guest speaker at a recent, global accounting network event I was very interested to hear a robust discussion focused on the subjective area of “materiality”. The unsurprising, and somewhat unsatisfactory, conclusion from the…

Hedgebook image

Financial Reporting Council – The Enforcers

Did you know that the UK accounting watchdog, the Financial Reporting Council, nearly doubled its fines to £12.8m last year for non-compliance with FRS102 when conducting audits? A common area of non-compliance for audit firms…

Where do Swaps Fit into Your Company’s Portfolio?

This is part 10 of a 10 part series on currency swaps and interest rate swaps and their role in the global economy. In part 9, we discussed regulation affecting swaps. In part 10, we’ll review the effectiveness of swaps and whether or not they should be used part of a hedging strategy.

Understanding Central Bank Liquidity Swaps

This is part 7 of a 10 part series on currency swaps and interest rate swaps and their role in the global economy. In part 7, we illustrated how companies use swaps in the global market place, but on a company-to-company basis. In part 8, we’ll explain the purpose of swaps on the central bank level and when they’re used.

Floating-for-Floating and Fixed-for-Fixed Swaps: Domestic and Foreign Currency Transactions

This is part 4 of a 10 part series on currency swaps and interest rate swaps and their role in the global economy. In parts 1 and 2, we discussed the beginnings of swaps as well as the differences between interest rate swaps and currency swaps. In part 3, we discussed fixed-for-floating swaps. In part 4, we’ll discuss floating-for-floating and fixed-for-fixed swaps.

Just what is an interest rate swap?

One of our team was recently asked to give a simple overview of interest rate swaps and how they work. Below was the explanation we put together, using a comparison between an interest rate swap to a fixed-rate bank loan to illustrate the key characteristics.

We think it is a nice, concise and clear way to explain interest rate swaps so thought we would share it. Comments welcome.