Risk Management Services
Information Services
Forex Advisory
Derivatives Advisory
Information Services
In what is arguably one of the most volatile markets, timeliness and relevance of information about the movements and trends in the forex markets is all the more crucial because it has a direct impact on the bottom line of the corporate. Accurate and timely information is not only a facilitator to decision making but also goes towards ensuring that the corporate is obtaining rates in line with the market.
We satisfy the above need by means of our information service module. Acting as information service providers to more than 500 corporate clients across the country, we ensure that our clients remain informed about the market and the changes taking place therein. Information is delivered through a variety of communication media like e - mail, fax and SMS. Reports are sent on a daily basis with a weekly and monthly round up. The reports encompass all possible information about the forex market and the money market. Apart from data on inter-bank rates and premiums, the reports would also provide data on various money market and forex benchmarks, indicative quotes for derivatives including fundamental and technical commentaries.
Forex Advisory
In simple words, risk could be defined as uncertainty about the future. Companies which are into foreign trade are exposed to the risk of fluctuation in exchange rates and interest rates as their cash flows and profitability are inseparably linked to these factors. This risk is accentuated because the underlying variables, namely currencies and interest are volatile and dependent on a host of macro economic and political factors.
We appreciate the fact that corporate personnel cannot be expected to devote their entire time and effort to just monitoring the forex market. We, therefore, step into the shoes of the corporate as far as management of their forex portfolio goes. Capitalizing on our expertise and infrastructure, we assist corporates right from the stage of drawing up forex risk management policies, proceeding to setting up benchmarking/costing levels for transactions and managing forex risk through hedging strategies. Our sole purpose is to see to it that we provide the corporate with all the inputs and advice needed for them to take an informed decision. Our forex advisory module helps in relieving the corporate of the responsibility of constantly monitoring forex markets and enables them to concentrate on their core business areas.
Derivatives Advisory
Over the counter interest rates and cross currency derivatives like interest rate swaps, forward rate agreements and currency options are one of the predominant tools used by corporat's to manage interest rate and currency market risks. More so, apart from plain vanilla structures, banks assist corporates to hedge their liabilities and assets by offering tailor made, specific structures. With options on currency now being allowed and further liberalization of the Indian financial markets, newer risk management products like interest rates options and more complicated structures would tend to dominate a corporate's hedging needs.
However, Indian corporates have been facing a very typical problem in terms of pricing of various derivative structures at the time of entering into derivative contracts. These problems faced are two fold - in terms of the pricing model used in the inter-bank markets and also yield curves used for such pricing. Besides this, the corporates also face a problem at the time of unwinding or terminating the deal, and here too the valuation system plays a dominant role. Apart from the above mentioned pricing and valuation issues, there are various operational problems, which include limited number of dealing banks, limited lines of credit for derivatives, actual transaction related issues, etc. Additionally, as the Indian markets open up for the use of new derivative products, corporates are typically shown exotic and nonstandard derivative instruments. Here, the corporate clearly needs to understand the effectiveness of the hedge of such derivative products.
We assist corporates in readying them to face these challenges and consult corporate treasuries on a real time basis with a specific focus on interest rate and currency derivatives.