Foreign Exchange
Published  7 MIN READ

Changing the Rules of the Game: A New Dawn for FX Risk Management

From micro-hedging to leveraging data analytics, technology is radically changing the way treasurers manage foreign exchange (FX) risk. Philippe Gelis, CEO and Co-Founder, Kantox, discusses the true value of automating FX hedging, explains the role of analytics in improving hedge execution, and comments on what makes fintech-bank partnerships a success for all involved, not least the corporate treasurer.

Eleanor Hill (EH): How is evolving technology assisting treasurers to better manage their FX risk?

Philippe Gelis (PG): The fourth industrial revolution is driving a fundamental shift in corporate treasury – away from manual processes, towards automation. This new way of working can be seen across payments and cash management, as well as FX risk management. Some corporates are currently very early on in their automation journey, others are far more advanced. But wherever a corporate is on the automation spectrum, there are always further benefits and insights to be gleaned, so I see this being the direction of travel for the foreseeable future. Automation is certainly not just a buzzword, it is the new normal for treasury.

EH: How does Kantox’s offering reflect the shift towards automation – and how are corporate treasurers benefiting?

PG: The heart of Kantox’s offering is the ability to automate FX hedging and execution. Our Dynamic Hedging solution enables corporate treasurers to completely automate hedging processes, hedge small or large transactions in bulk, and streamline FX workflows.

A practical example of where this has been extremely useful for treasurers was the day of the Brexit referendum results. Corporates running our automated hedging solution had their risk fully under control when they arrived at their offices that morning, as their hedges were executed overnight. Those without such a solution in place were immediately faced with trying to estimate their FX exposure and hedge in bulk as quickly as they could, knowing that the market was continually falling. One treasurer lost close to €2m as a result of having manual processes in place.