FXTalking Shop

Talking Shop: Approval Level For Executing Hedging Contracts

By August 19, 2021No Comments

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].

Member question: “I know we talked about this at some point this year, but I wanted to see if you all would help me benchmark. What level of approval/review/sign-off is required prior to executing your hedging contracts?”

Peer answer 1: “Our treasurer signs off on each monthly tranche of cash flow hedges we execute, as per our policy. We don’t require a monthly sign-off on balance sheet hedges.”

Peer answer 2: “For balance sheet hedges and cash flow hedges, the treasurer approves the trades. The assistant treasurer, or a delegate, approves true-ups.

  • “If we were to make substantial changes to the hedge programs, then we would inform and seek the approval of the CFO prior to making those changes.”

Peer answer 3: “Two authorized FX traders are required to review and approve any FX trades. Options require treasurer or assistant treasurer approval.”

Peer answer 4: “Our CFO approves the cash flow hedge strategy monthly, or more frequently if market movements warrant a different strategy.

  • “Balance sheet hedges are governed by our policy and don’t require separate CFO approval.
  • “I review every executed trade at the end of the month to ensure they are aligned with approvals (CF hedges, balance sheet hedges, spot deals, etc.).”
Justin Jones

Author Justin Jones

More posts by Justin Jones