Our currency hedging servicesinclude hedging calculation and execution, configured according to the client’s guidelines, such as hedging ratio, roll frequency and netting option
How can asset managers and asset owners optimise their investments in non–base currency securities using currency hedging techniques?
SGSS currency hedging consists of various solutions:
For asset managers, asset owners, corporates and banks, investing in non-base currency, securities can be managed with spot currency transactions either manually, or systematically with standing instructions, or with a combination of both. These transactions are purely technical and leave the portfolio or fund with a currency exposure of the value of the assets and the remaining cash in these non-base currencies.
When SGSS acts as custodian, it is possible to set up standing instructions for principal and income.
Asset owners or asset managers might also want to hedge each of the non-base currency assets in their portfolio or their fund, against foreign exchange variation using Share Class Hedging, which is based on forward forex contracts.
More specifically asset managers may want to offer the performance of their fund in a currency different from its fund currency. Share Class Hedging (SCH) is designed for this purpose, using forward forex contracts and adjustments at subscription and redemption, at a predefined exchange rate and at a defined time period.
With Multiple Currency Hedging (MCH), a combination of portfolio hedging and share class hedging, asset managers can simultaneously hedge each currency bucket of a fund, against foreign exchange variation and offer it in currencies different from its base currency. This combined solution has the advantage of offering a fund in the base currency of the investor without any remaining underlying currency exposure. This minimises Solvency II capital requirements and provides a transparent performance for investors subject to this regulation.
Societe Generale Securities Services’ three currency hedging solutions are offered on a contractual basis.
Key features and benefits
Once the credit line has been approved, they ensure that Societe Generale is the counterparty for all foreign exchange transactions and respects transparency principles in terms of calculation and pricing
Our currency hedging solutions ensure that Forex OTC transactions are governed by Master Agreements with CSA
They provide a global approach in terms of reporting (currency allocation reports, pre-trade reports, post-trade reports, hedge change reports, deal blotter, class exposure reports, etc.),
Our foreign exchange hedging services are offered in open architecture, i.e. they are available whether or not Societe Generale Securities Services is your asset servicer.
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