Managing FX Risk With Subsidiaries Around the World

Hamilton Court’s experience in working with multi-national companies enables us to have a strong understanding of the types of challenges faced. Whether those challenges are operational, commercial or treasury management focussed, our team of professionals provide the advice, guidance and support to implement effective solutions to FX risks.

Hamilton Court understood the importance that our client’s head office put on having clear visibility on FX operations across its multinational group as well as ensuing that treasury management processes were sufficiently decentralised to tailor to the needs of each subsidiary.

Following a host of productive meetings with our client’s treasury function, Hamilton Court implemented a hedging solution to fit the aforementioned aims. The strategy involves each subsidiary sending forecasted FX exposures spanning the next year, with these projections being updated on a rolling monthly basis. Their dedicated account manager then compiles these forecasts and executes trades to hedge the group’s total exposure. Here, subsidiaries benefit from the flexibility of being able to draw on a blended monthly group rate, according to their specific requirements. Monthly updates on subsidiaries’ forecasts and dialogue with Hamilton Court reduces the potential for the group to be over or underhedged and thus limits market risk.

Providing a layered hedging solution ensured that over the course of the hedge our client was not at risk to foreign exchange fluctuations, thus helping to improve cashflow visibility, forecasting and pricing.

The Provision of Credit

Hamilton Court’s extensive experience working with clients in the retail space has given us an unrivalled understanding of the importance of effectively managing cashflow. A changing economic landscape has only underscored the need for practical cashflow management, as has the pandemic, supply chain shortages and the rising credit costs. As such, we understand that an increasingly challenging environment continues to exacerbate cost pressures for business in the retail sector. Thus, our client continues to benefit from Hamilton Court’s provision of an extensive credit line which helps them to optimise their cashflow efficiency. As the cost of credit soars throughout global markets and an ensuing credit crunch hurts businesses access to liquidity, their credit line has served as an indispensable asset to free up capital for other areas of the business.

Outstanding Service

Our client continues to be supported in the knowledge that their dedicated account manager always remains on hand to execute trades, ensure timely payments, and provide them with the latest in fundamental data, technical analysis and reporting requirements. Our client also takes comfort in the fact that Hamilton Court’s extensive panel of liquidity partners provided a competitive advantage in pricing while offering liquidity in over one hundred currencies across major, minor, and exotic pairs. Our in-house settlements function and cutting-edge treasury management technology also ensures that payments are sent on time to all corners of the globe.

The effective management of our client’s FX exposure and provision of risk mitigation solutions has proved invaluable to their business and bottom line. Using hedging solutions has reduced market risk from our client’s exposure, protecting their revenues and costed levels. Meanwhile, the centralised strategy has enabled our client’s group treasury function to have clear visibility over the entirety of their group’s FX exposure while our continual dialogue with each subsidiary continues to serve each firm’s specific requirements. Hamilton Court is proud to have been their partner for over half a decade and provide them with market leading service and risk management solutions.