AutoFX Hedging

AutoFX Hedging is a modern cloud platform that is easily accessible via a web browser.  It takes the traditional hedging workflow to a new level of efficiency by automating the manual calculation of FX exposure and streamlining your forex hedging process.  

With hedging automation, you can skip the error-prone manual work. However, it doesn't mean that your role will be diminished or replaced by technology. The automation of administrative tasks simply frees up your time for higher-value, strategic planning thinking. It enables you to concentrate on analysing your company’s needs, outlining your FX policy and the creating a functional hedging strategy. These are needed when setting the parameters, as well as overseeing, assessing, and readjusting the automation hedging processes.  

Here´s an example of the streamlined FX trade workflow: 

1. Identify the nature your FX exposures, define your FX policy and your hedging strategy. 
2. Set your FX risk policy or your rules for hedging in AutoFX Hedging. This needs to be done naturally only once. 
3. Fetch the order items from your ERP by pressing one button or by dragging and dropping your Excel file into the system.  
4. AutoFX Hedging combines your order items with open FX trades according to your policy and tells you which trades are needed – automatically! 
5. You can then execute the trades in AutoFX Hedging with one click.  

There is no need to transfer data or send e-mails back and forth, as all the approvals and documentation can be done in AutoFX Hedging.  

With AutoFX Hedging, you can use individual orders, invoices or rough cash flow forecasts as basis for hedging. You can choose between 1-to-1 hedging and use individual orders or invoices, or forecast-based hedging with easy to update cash flow forecasts.  

Depending on your hedging method, Nordea’s AutoFX Hedging offers two options: 1-to-1 Hedging and Forecast Hedging.  

1-to-1 hedging  

For companies that hedge individual orders or invoices, 1-to-1 hedging is the automated tool to choose. It combines your business items, open FX hedges and your hedging strategy – and helps you figure out what you should trade accordingly. 1-to-1 hedging is typically used by trading companies in the food & agriculture, retail and wholesale trading sectors.

Benefits of 1-to-1 hedging 

• Easy orderbook upload via Excel or through your own bookkeeping system 
• Assigns each individual order or invoice an individual FX rate automatically 
• Hedges batches in seconds in accordance to your chosen hedging policy 
• Identifies changed orders, if asked to  
• •Proposes FX trades that you will approve before actual trading 

Use this strategy if… 

• you have a long order book that gives brings substantial FX risks 

• you have a need to change your prices before orders or invoices are booked 

Forecast Hedging 

Forecast-based hedging is for corporates that are going to receive and/or pay certain foreign exchange cash flows in the future whereby it is not fully clear what the exact amounts will be or when they will be settled. 

Corporates that typically apply forecast hedging are project-oriented companies in industries like construction, machine building, software sales and consultancy. 

Benefits of forecast hedging: 

• Can be created for anticipated hedge items within a defined time period such as a month, a quarter, or a year. 
• Provides you with a cash flow forecast page that can be tailored to your company´s cash flow statements 
• Requires you only to update the foreign currency cash flow forecast and provide cash balance 
• Calculates the FX exposures 
• Includes individual web or mobile trade transactions in the exposure calculation 
• Offers valuable insights into future FX exposures based on account balances, cash flow forecasts and existing positions 
• Proposes FX trades based on the hedging policy 

Forecast-based hedging combines your hedging strategy, cash flow forecasts and open FX hedges in an easy way and helps you figure out what trades will take you where you want to be.  

Use this strategy if… 

• Your company is focusing on economic risk inherent in the loss of demand or margin 
• Your FX risk stems from forecast cash flows and not from fixed business items  
• Your possibility to change prices is limited or can have adverse effects 
• You want to utilize layered hedging: hedge the closest months to higher extent than the further months 

With automated hedging tools, the hedging process that previously took hours to complete is carried out in seconds. Nordea’s AutoFX Hedging also ensures that your hedging policy is followed 100%. 

With AutoFX Hedging you can: 

• Save time by automating the mechanic number crunching 
• Avoid unnecessary mistakes by automating manual tasks 
• Give more time to focus on the strategic questions around hedging 
• Make it easy to implement a preferred hedging strategy 
• Improve control and documentation: every step of the process is documented on one platform 

Nordea's AutoFX Hedging is suitable for any company with a steady amount of FX trades annually. They’re proven to be useful for companies that are either hedging their FX risk systematically, or would like to be do that easily.  

All businesses are different in their FX goals and risk tolerance. The choice of specific auto hedging tools, 1-to-1 Hedging or Forecast Hedging, depends on your company´s hedging policy and your specific needs.  

Our dedicated team of forex experts and product specialists will advise you on the best FX automation, tailored to your unique needs.  

 The implementation of our auto hedging tool is simple and straightforward. We will guide and assist you throughout the process, if any questions arise.