HedgePilot - Filling the gap in and e-trading FX world
HedgePilot is your digital FX risk management product complementing your Corporate Treasury Sales product range. It recommends when and how much to hedge based on cutting-edge artificial intelligence.
The global trend to use more simple products with e-trading execution puts pressure on the FX business case of most banks.
Revenue from FX business accounts for more than half of most corporate treasury sales units these days. 70% or more of the traded FX volume arises from plain vanilla spot/forward transactions. The rise of multi-bank platforms has attracted a market share which has nearly doubled over the past five years, with corresponding margins shrinking by 50%. Achieving sustainable profits in a platform economy requires innovative solutions that add value for your clients. The competition is taking action with big players already working on enhanced hedging solutions.
Most (corporate) FX hedgers still rely on personal experience and intuition when making hedging decisions, but are trying to replicate option payoff profiles.
Our solution
Treasury Management System
Aggregation & Netting
Decision Process
Currently: human bias & manual
NEW:
unbiased & automated
Transaction Execution
Unchanged processes:
- Telephone
- Single Dealer platform
- Multi Dealer platform
When
Neither business nor FX markets are perfectly predictable. However, your clients need to make smart FX risk management decisions to optimize their companies’ risk-return profile. Timing is always a key challenge.
When is the right time to act and trade a specific transaction on FX markets? HedgePilot will tell you.
How much
FX hedging is not a binary decision. Your clients would like to reduce the risk of negative NPVs in their hedging transactions and avoid cost of opportunity. They would like to reduce cost of trading and hassle with too many transactions. At the same time, they need to keep FX risk within limits.
HedgePilot will tell you the optimum amount to hedge at any given point in time.
The advantages of Hedge-Pilot for banks
Delivery of advanced and non-biased hedging decisions (unique selling point) by state-of-the-art AI models
Improved revenue through an additional product and various fee models
Implementation without disrupting your established processes
Provision of the solution as it is your own (i.e. CD)
Adding e-value to a purer execution and e-trading environment by means of a technology offering
Tech Highlights
Artificial intelligence used in finance application
- Machine learning
- Neural networks
- Quantile regression forests
- 30 billion simulations per day
- +20years of experience in FX structuring and pricing
- 1 focus on increasing banks´ FX revenues in the end-customer segment
Market enviroment
The platform incorporates a market interface with near-time financial data. It includes all relevant data on FX markets such as spot, implied volatility and interest rates. It is complemented by additional information from related markets and from macro-economic indicators.
Company specific reality
Relevant FX risk management information is an integral part of the optimization process. For every exposure to be managed, individual information is taken into account. That includes risk tolerance, budget rate, minimum trading volume and hedging policy.