Study FOREX WithThe Role Of FOREX Automation And Hedging

TStep-4, To Change Forex

As a first step in our move towards STP of FOREX hedging we undertook a detailed review of the existing manual process flow, with the overriding rule/objective for the new process that we would key in data only once.

For each manual step in the current FOREX hedging process we asked ourselves a number of questions: what value did the manual intervention provide, what calculations were required, and were we just checking FOREX pricing? Depending upon the answer we would then decide whether or not it was possible to eliminate that manual step.

For example, while we could not eliminate initial data entry, we could certainly dispense with the manually re-entry of static data, such as settlement instructions. By the same token, decisions such as whether or not to hedge required a human element, while repetitive calculations such as netting did not. We also considered the investment in technology that would be required to automate the FOREX hedging process. It became
immediately apparent that this was smaller than might be expected – FOREX hedging process, we designed and executed an STP replacement. This starts by obtaining information on the various FOREX exposures online, via Web based templates that feed directly into our treasury (FOREX) workstation, Green River Computingor example, relatively simple programs using Web technology could be used to collect, collate and net subsidiary data.

The new FX hedging process

 Based upon our analysis of the existing largely manual’s Orbit. Orbit then aggregates the exposure information and sets up the appropriate trade(s). These are pushed via a secure ADI data transfer to an online FOREX multibank web portal, where they are executed with approved counterparty banks. Juniper currently uses FXall for this purpose, but any one of a number of multi or single bank portals, such as Bank of America’s FXtransact, would also be suitable for this purpose.

These completed trades are downloaded back into Orbit via the same secure ADI route, with any transfer errors being automatically flagged by Orbit. Once these trades have been downloaded to Orbit, they are locked and saved and therefore cannot be changed by the trader.

FXall’s “Settlement Center” module is used to record all trades, whether they are done online with FXall or over the phone, and thus effectively acts as a third-party trade confirmation agent. Orbit automatically recognizes those trades executed.