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Whether or Not to Collateralise the Hedging Process: That is the Question

Hedging Processes

Whether we like it or not, in future the hedging of financial risks may never be the same again.

In one sense, the dilemma is in choosing between significantly better hedging or trading terms - but with potential cash volatility and higher administrative cost in exchange, and poorer terms with no cash volatility or additional administrative cost.

Key Points

  • The requirement to post collateral
  • Questions to ask yourself
  • Possible solutions
  • So what would be advisable?

 

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Written by:

expert

François Masquelier

RTL Group

Head of Corporate Finance and Treasury, RTL Group, and Honorary Chairman of the European Association of Corporate Treasurers

This article is available as part of an extensive case studies collection: Tax & Accounting Series

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