20 Oct 2011
Fusion Asset Management has launched Fusion FX Liquidity Hedge service for corporate clients. Fusion has been implementing this service for financial institutions since 2009 and is expanding into the corporate space due to demand from leading European corporations.
The new service offers currency hedgers a way to use option strategies to offset the impact of large FX moves on their liquidity positions. Companies often hedge their currency risk using FX forwards, but this exposes them to liquidity risk if a large adverse move occurs because their credit lines can be threatened.
The Fusion FX Liquidity Hedge uses a combination of long vanilla and barrier options to ensure that downside risks are known and costs are limited.
Kirill Ilinski, Fusion Managing Partner, said: “Several months ago I was approached by one of Europe’s largest exporting companies to discuss overlay solutions for their FX hedges. They were not being offered what they needed by their banks and they asked us to develop a bespoke solution for them. Since then we have received further demand, and brought on new salespeople from investment banks specifically to cater to these clients.”
The new service offers currency hedgers a way to use option strategies to offset the impact of large FX moves on their liquidity positions. Companies often hedge their currency risk using FX forwards, but this exposes them to liquidity risk if a large adverse move occurs because their credit lines can be threatened.
The Fusion FX Liquidity Hedge uses a combination of long vanilla and barrier options to ensure that downside risks are known and costs are limited.
