Hedging
with an edge
starts here.
you right here
- Protect your business interests from volatile foreign exchange market movements.
- Minimise your interest expenses and protect your returns from floating rate assets.
- Hedge against commodity prices and make potential gains from volatile market conditions.
Hedge foreign exchange volatilities and risk with our Currency Options.
Hedge FX volatilities and risks
Currency Option is a contract between 2 parties where the buyer of the contract receives the right but not the obligation to buy/sell a currency at a specific price on a specific date.
The main purpose is for corporate or commercial customers to hedge FX volatilities/risk.
A new dimension of dynamic hedge to manage market risk and improve the bottom line of your company.
Customised FX Risk Management Solutions
Structured Forward is a flexible FX tailor-made hedging mechanism that allows you to express a view on the currency movement that potentially best fits your expectation and hedge requirement. Unlike conventional forward hedging
which is static in nature, Structured Forwards offers a new dimension of dynamic hedge to manage the market risk, hence potentially improving the bottom line of your company.
Most Structured Forwards are zero cost.
Exchange interest rate obligations or receipts into different currencies.
Hedge interest rate and FX risk
Cross Currency Swap (CCS) is a legal agreement between two parties to exchange interest rate obligations or receipts in different currencies for periods generally ranging from 1 to 10 years.
- A currency swap is similar to an interest rate swap but involves the exchange of two different currencies
- While an IRS hedges interest rate risk, Cross Currency Swap hedge interest rate and FX risk
Swap in 3 steps
-
Exchange of principal
In the basic currency swap the two counterparties agree to the immediate exchange of one currency for another. -
Exchange of interest rate obligations
The second step is for the two counterparties to exchange interest payments. This usually involves one counterparty paying fixed interest rates and the other paying floating rates. -
Re- exchange of re-exchange of principals
In the final step the two principals are re-exchanged at the original spot rate.
Make interest payments on agreed interest payment dates.
Hedge against unfavourable interest rate movements
Interest Rate Swap (IRS) is an agreement between 2 parties to make interest payments to each other on agreed interest payment dates based upon a notional amount of principal.
How it works
Typically, one party will pay a Fixed rate, the other will pay the floating rate (such as KLIBOR) in the same currency. The swap is based on a notional principal, generally for periods of 1 to 10 years.
Potential users include borrowers, investors, fund managers and finance / leasing companies. A precondition for IRS includes RHB's credit approval and signing of ISDA & CSA documentation and Board of resolution.
Actively manage your interest rate exposure against adverse market moves and benefit from favourable market moves.
Manage your interest rate exposure
An interest rate option (IRO) gives you the right but not the obligation to fix the interest rate on a loan or deposit for a pre-determined amount that starts on an agreed future date and is for a specified term.
IRO allows a company to actively manage its interest rate exposure by providing a form of ‘insurance’ against adverse market moves while still allowing you to benefit from favourable market moves.
Like all insurance, a premium is paid for that protection. The 3 basic structures include:
- Interest Rate Cap
- Interest Rate Floor
- Collar
Exchange interest rate obligations or receipts into different currencies.
Hedge interest rate and FX risk
Cross Currency Swap (CCS) is a legal agreement between two parties to exchange interest rate obligations or receipts in different currencies for periods generally ranging from 1 to 10 years.
- A currency swap is similar to an interest rate swap but involves the exchange of two different currencies
- While an IRS hedges interest rate risk, Cross Currency Swap hedge interest rate and FX risk
Swap in 3 steps
-
Exchange of principal
In the basic currency swap the two counterparties agree to the immediate exchange of one currency for another. -
Exchange of interest rate obligations
The second step is for the two counterparties to exchange interest payments. This usually involves one counterparty paying fixed interest rates and the other paying floating rates. -
Re- exchange of re-exchange of principals
In the final step the two principals are re-exchanged at the original spot rate.
Hedges the movement of price volatility of crude oil
Hedge against unfavourable movement of crude oil
A commodity hedging product which uses options to hedge the market risk/price volatility of crude oil. The reference for the daily settlement price (“Reference Price”) for the Product can be either the Brent Crude quote in ICE or
the WTI quoted in NYMEX. The transaction does not involve the actual physical delivery of the commodity at the Settlement Date, it is cash settled in US Dollars (“USD”).
By entering into the Contract, the Client agrees to the trade parameters of the Contract which include the Reference Price, the Notional Quantity of Oil Per Barrel, the Strike Rate(s), the Tenor and the Settlement Date. The performance of the Reference Price against the Strike Rate(s) on each Expiry Date will determine the payout in USD between RHB Bank and the Client on the Settlement Date and such. The payout in USD will be made based on the conditions set below:
If the Client is a buyer of Call Option and seller of Put Option:
-
If the Reference Price > Call Option Strike Rate, the Client will receive USD from RHB Bank based on the following formula:
[Reference Price – Call Option Strike Rate] * Notional Quantity - If the Put Option Strike Rate ≤ Reference Price ≤ Call Option Strike Rate, no settlement will occur between the Client and RHB Bank
-
If the Reference Price < Put Option Strike Rate, the Client will pay USD to RHB Bank based on the following formula:
[Put Option Strike Rate – Reference Price] * Notional Quantity
If the Client is a seller of a Call Option and buyer of a Put Option:
-
If the Reference Price > Call Option Strike Rate, the Client will pay USD to RHB Bank based on the following formula:
[Reference Price – Call Option Strike Rate] * Notional Quantity - If the Put Option Strike Rate ≤ Reference Price ≤ Call Option Strike Rate, no settlement will occur between the Client and RHB Bank
-
If the Reference Price < Put Option Strike Rate, the Client will receive USD from RHB Bank based on the following formula:
[Put Option Strike Rate – Reference Price] * Notional Quantity