By François MASQUELIER, CEO of Simply Treasury - Luxembourg
Banks are seriously contemplating credit-adjusting price when they quote on FX derivative transactions. The credit parameter to be included in quote would have a significant impact on cost of hedging unless corporates use collaterals. It could be one of the consequences of the current financial crisis.
The Price Is Right
Treasurers will have in future to consider the potential extra margin to be included in forward FX transactions to reflect the credit risk faced by bank counterparties. It also reflects the increasing cost of compliance, which continues to inflate overtime. Like in the famous game show created by Fremantle, is “the price right”? Is...
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