Understanding Hedge Creation and Maintenance
This topic includes:
Prerequisites.
Common elements used to create and maintain hedges.
The hedge life-cycle.
Before you create and maintain hedges, you must:
Analyze cash position and settlements using Cash Management.
From cash position and settlements information, identify investing or borrowing instruments using Deal Management.
Calculate and analyze your risk based on the cash and deal information and decide if you must create a hedge.
Field or Control |
Description |
|---|---|
Initial Fair Value Attributable to Hedged Risk and Fair Value |
Displays the fair value (mark to market) of a treasury deal, or the fair value or cash flows of a hedged item. |
Initial Fair Value Adjustment and Fair Value Adjustment |
Displays the (cumulative) adjustment amount excluded from the calculation of the change in fair value of a deal or hedged item. This amount corresponds to amortized cost for investments and to ΒΆ 19 adjustments for a hedged item. |
Use Zero |
Select this check box to use zero value for calculation, instead of initial fair value amount. |
Use Values |
Select this check box to use entered values for calculation, instead of initial fair value amount. |
New Value |
Click to calculate the new value of the hedge per specified parameters. |
Here's an overview of the entire hedge life-cycle:
Create hedges, either importing information or creating hedges manually.
Adjust and remove hedges using the Hedge Maintenance page.
Process hedge Accumulated Other Comprehensive Income (AOCI) using the Process AOCI page.
Create hedge groups and maintain hedge items and hedge groups.