l

layered hedging strategy

A layered hedging strategy is an FX hedging program designed for firms that require continuity on pricing period after period, i.e. firms that need to keep prices constant—even on the back of an adverse intra-period currency movement known as a ‘cliff’. Firms in this scenario need to achieve a smooth hedge rate over time. In […]

leveraged forward

A Leveraged Forward contract is an over-the-counter derivative product that allows holders to lock-in more favourable exchange rates than an outright forward for part of their exposure as well as to benefit from favourable market movements using leverage. The leverage defines the amount of risk the hedger is willing to assume. Due to their complex […]

leveraged trading

In FX trading, leverage trading refers to the use of credit —extended by the dealer or trading platform— aimed at magnifying the notional value of a position. If a trader has a given amount of margin in deposit, he or she is allowed to speculate on a notional amount that can be many times as […]

limit order

A limit order, in the context of foregin exchange risk management, is an order to buy or sell a currency forward at a specific exchange rate or better. This exchange rate is determined by the treasury team. A buy limit order can only be executed at the limit exchange rate or lower; a sell limit […]

line of credit

A line of credit is a loan facility agreement between a lender and a borrower. A total amount is agreed for the credit line. It is extended to creditworthy customers by banks and money lenders. Lines of credit form an integral function in assisting businesses in completing purchasing operations. Advantages to using a line of […]

liquidity

Liquidity is a financial concept that refers to the ability to convert assets into cash. It is crucial for a company to have good liquidity in order to pay its bills in a timely manner. In order to fulfil payment obligations on an ongoing basis, a company must ensure that total cash flow exceeds total […]

liquidity ratio

In corporate finance, liquidity ratios measure the level of assets that can be quickly and cheaply converted into cash and their proportion to the firm’s short-term obligations. Because the book value of liquid assets is usually reliable, liquidity ratios allow investors to get a picture of a firms’ liquidity position. The most widely used liquidity […]

liquidity risk

In corporate finance, liquidity risk is the risk that a firm may not be in a position to lay its hands on the cash needed to meet its short-term obligations. To assess liquidity risk, investors look at several financial ratios, including the current ratio, the quick ratio and the cash ratio.  

live exchange rates

Live exchange rates are real time spot and forward currency quotes provided by liquidity providers such as banks, FX brokers and dealers, and multi-dealer trading platforms. Live exchange rates allow managers to monitor their FX exposure and to execute hedges when required. By connecting to providers of live exchange rates, Currency Management Automation solutions allow […]

local currency payment

For a company that operates internationally, local currency payments are transactions that are priced, invoiced and settled in the local currency of a client (sales transactions, or exports) or supplier (purchase transactions, or imports), rather than in the firm’s own functional currency. On the contracting side, buying capacity in the local currency immediately results in […]