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Corporations increasingly using FX options for hedging according to Misys
Publication date: 6 December 2011
Author: Misys plc
Misys plc, the global application software and services company, today announces that an analysis of client activity using Misys Confirmation Matching Service (CMS) in 2011 compared to 2010 shows a rapid increase in the use of foreign exchange options by its corporate and fund management clients. Combined with a 25% increase in active client sites, the rise demonstrates the heightened volatility in international currency markets, and the increasing need for corporations to review their hedging strategies in times of increasing uncertainty in the Eurozone.
Taken from the activity of 130 of its more than 1,000 global clients, including all of the top 10 foreign exchange banks, Misys analysed the amount of options matched through its CMS solution and found that from September 2010 to September 2011 there had been an increase in matched trades of over 100%. The rise in the volume of FX options is part of a broader trend of corporations updating their hedging strategies owing to the uncertainty in the Eurozone. FX options are now increasingly the strategy of choice as they provide much more flexibility and protection against the volatility.
“These are certainly increasingly difficult times for corporates to manage and mitigate FX risk,” said Stefan Lind, Group Treasurer at Saab AB., the global defence and security company. “We have found that we are increasingly hedging that risk with the use of FX options, and being able to work with Misys and its Misys CMS solution makes that strategy so much easier to implement and removes the post-trade operational risk that would otherwise exist if we were not using this electronic service.”
Misys CMS has been matching FX options for over nine years, and Misys now has more than 130 clients using the options module globally. Sixty four bank sites currently use Misys CMS for options, including the top 10 global foreign exchange banks, and the solution is at the forefront of matching exotic options, successfully handling these for its clients since market readiness in March 2010.
“Clients such as Saab and Scania are coming to Misys to help them reduce operational processing risk by matching complex trades,” said Gilmore Bray, Global Managed Services Director at Misys. “The growth in post-trade processing activity also comes at a time of increased active clients, which is up 25% showing a real move towards FX options, and an acknowledgement by our clients that Misys CMS is truly a multi-asset class service. It’s a challenging time for our clients, and simplifying the processing of complex trades through our solution can help them focus more on their strategies, and not have the worry and risk of manual post-trade processes.”
Misys Confirmation Matching Service facilitates the confirmation process between SWIFT and non-SWIFT counterparties, allowing Misys to offer unprecedented functionality across the broadest possible spectrum of instruments and counterparties. Globally recognised as secure and effective by financial institutions, asset managers and corporations alike, the confirmation matching technology services all treasury and capital markets instruments. Misys continues to participate in the Industry Post-Trade Automation working group and works closely with the members to provide innovative solutions to automate the widest range of options-based products.