HedgePilot

Filling the gap in an e-trading FX world

HedgePilot is your digital FX risk management product offering 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

Curently: human bias & manual

NEW

un-biased & 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 HedgePilot 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

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Market environment

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.

Tech highlights

Artificial intelligence used in finance application

  • Machine learning
  • Neural networks
  • Quantile regression forests
  • 30 billion simulations per day
  • 35experts covering FX and rates
  • 10financial engineers developing best-in class model library
  • +20years of experience in FX structuring and pricing
  • 20+FX clients relying on our advice and solutions
  • 5years of experience in FX structuring and pricing
  • 1focus on increasing banks´ FX revenues in the end-customer segment

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