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fair value hedge

Under Hedge Accounting, a fair value hedge is a hedge of the exposure to changes in the fair value of a recognized asset or liability or unrecognized firm commitment, attributable to a particular risk and could affect profit or loss. (The other main type of hedge is the Cash Flow hedge).  

federal reserve wired network (fedwire)

Fedwire is the abbreviation for the United State’s Federal Reserve Wire Network, a real-time gross settlement funds transfer system that settles funds electronically between any of the United States banks registered in the Federal Reserve System. Each transaction is processed individually and settled upon receipt via a highly secure electronic network. Settlement of funds is […]

financial conduct authority (FCA)

The Financial Conduct Authority (FCA) is a United Kingdom regulatory body that focuses on the regulation of financial services firms (retail and wholesale). It is funded by membership fees it charges and is completely independent of the United Kingdom government. The FCA has a crucial role in maintaining the integrity of financial markets in the […]

financial statement translation

Financial statement translation is the process through which a firm restates, —in the currency in which a company presents its financial statements—, all assets, liabilities, revenues, expenses, gains and losses that are denominated in foreign currencies. This process of financial statement translation results in accounting FX gains and losses. There are three main financial statement […]

fintech

The term Fintech, made up of ‘finance’ and ‘technology’, describes innovative companies in the financial services industry that rely on software-based solutions to deliver their products. Fintech firms are active in a wide array of B2C and B2B markets: payments, insurance, loans, cryptocurrencies, asset management, equity, FX and commodities. Risk management is an area of […]

fintech companies

Fintech companies provide financial services using technological innovation. The rise of Fintech was made possible by the convergence of technological development and changes in financial regulation. Fintech companies essentially offer alternatives to traditional banking in services such as equity funding, lending, payments and foreign currency trading. What sets these new companies apart is their use of […]

fixed exchange rate

A fixed exchange rate is a policy that consists in pegging a country’s currency to USD or EUR. By removing the danger of wild currency fluctuations, fixed exchange rates can be a valuable tool in the arsenal of a country that seeks to stabilise its inflation rate. However, sooner or later the fundamentals are likely […]

flexible forward

A flexible forward contract, also known as an open forward contract, is a contractual agreement to buy or sell a specified amount of one currency against payment in another currency on or before a specified date in the future known as the ‘value date’. By contrast, when both parties are legally obliged to exchange the […]

flexible hedging strategy

A flexible hedging strategy or program is the hedging of future FX-denominated cash flows that result from contractually binding transactions, whether or not the corresponding receivables/payables have been created. In a flexible hedging program, forwards are booked against SO/POs (sales orders/purchase orders) and/or AR/AP (accounts receivable/accounts payable). Flexible hedging strategies or programs call for constant […]

floating exchange rate

A floating exchange rate regime lets currencies find their level in the foreign exchange market. Contrary to a fixed exchange rate regime, where a currency is pegged to another at a fixed rate, exchange rates in a floating exchange rate regime are determined by the interplay of supply and demand. The current floating exchange rate […]