FX Commercial Solutions
Elibank Vernon’s Financial Risk Advisory team brings a consultative approach to clients’ FX risk management needs, including risk analysis and identification, hedge design and strategic planning, hedge execution, position reporting and clearing, and ongoing hedge/risk management. With customers around the world in the Americas, Europe, Australia, Asia, Africa and the Middle East, Elibank Vernon has a broad range of experience and an excellent reputation with its clients around the globe.
Due to the daily volatility in the FX currency markets, conversion risk for income, interest payments, assets and liabilities can complicate budgeting, planning, and business forecasting. In turn, this can lead to poor returns and operating losses. Broadly speaking, companies typically have the greatest exposure to FX risk since the U.S. dollar is used for pricing and invoicing the majority of world trade. Entities outside the U.S. who produce goods valued and/or denominated in dollars (such as grains, other foods, energy, mining output, manufactured goods, etc.) or who have dollar denominated input costs (such as energy, fertilizers, metals, etc.) are required to continually convert U.S. dollars back to their domestic currency and vice versa. Additionally, dollar loans made around the world to non-U.S. entities can represent a significant risk exposure.
The Elibank Vernon group of companies offers a broad array of professional services and access to the global foreign exchange markets for commercial and institutional clients. Experienced FX teams provide recognized advisory and execution and services in many tradable currency pairs and derivative instruments.
FX Risk Analysis
The methodical approach of Elibank Vernon to FX Risk Analysis begins with understanding our client’s needs by taking a holistic view of the business based upon foundational parameters focusing on:
- Client’s principal business
- Local and global competitive landscape
- An assessment of how profits are made
- The countries that the customer does business in
- Identification of revenue drivers, predominant currencies and the frequency of payment flows
FX Hedge Design
The next step is to establish a set of risk management hedge strategies that will effectively meet all the objectives of the company and efficiently mitigate client risk exposures. Using a wide range of FX derivatives, currency risk can be managed at low cost and with appropriate and suitable risk/reward characteristics. Elibank Vernon operates trades in a wide variety of OTC FX derivatives including: spot/forwards, NDFs, options (exotic, vanilla and binaries/digitals), and structured products. These instruments can be customized to directly offset currency exposures and provided for a variety of desirable payout profiles when combined with customers’ existing exposures.
FX Trading & Execution
The third step is to efficiently price and execute the desired transaction(s). Elibank Vernon operates FX trading desks in 3 time zones and offers round the clock trading from Sunday night through Friday afternoon. OTC FX traders average over 22 years of experience each pricing, trading and risk managing FX derivatives. Our professionals are available for strategic trade consulting, hedge design, risk simulation, pricing and execution from Sunday evening through Friday afternoon.
FX Position Reporting & Clearing
The fourth step is to clear the customer business by generating daily customer statements, marking positions to market and manage the daily cash positions of the customer. The team of risk professionals at Elibank Vernon generates daily statements for OTC positions, calculates initial and variation margins, and manages customer exposures.
FX Hedge & Risk Management
The last step in the process for our commercial solutions involves ongoing risk management of customer positions and hedges. This is among the most critical aspects of the process because as daily, weekly and monthly commercial transactions conclude, our client’s risk management strategy is unwound, and profits and losses are booked. The efficacy of the hedge strategy is then reviewed and managed in accordance with client specifications.
FX Clearing & Execution
Elibank Vernon has prided its core FX group capabilities on delivering high quality execution through traditional and emerging methodologies. This has allowed us to offer a veritable roster of choice to our clients for execution. In addition, since we are focused on your growth, our clearing solutions provide real time account information and extensive reporting capabilities. Our access to liquidity and substantial credit relationships allow us to ensure you can execute trades quickly and efficiently.
The company's management team has extensive global experience with some of the largest commodity trading houses and risk management skills honed in agriculture, base metals and energy markets. In addition, the senior management team has in depth practice in establishing successful...
Commodity Risk Management
Elibank Vernon’s risk management consultants have in-depth expertise in the supply-and demand situation for specific commodities, access to our extensive proprietary database and detailed historical knowledge, and substantial experience in creating and using innovative risk-management tools.
The Risk Management Tool
The Elibank Vernon Integrated Risk Management Tool (RMT) is a unique customer-centric approach to commodity risk management. We begin by working with our customers to identify and quantify all commodity risk that they may have in their business. We then construct a strategic...