Hedging

Q

quin8670

For companies that have international revenue streams but are too small to have their own treasury departments (say revenues $10million to $100 million) what do they do for hedging?

Are there companies that try to provide hedging services for them?
 
Any idea what their fee structure is? Is it based on the amount of money they hedge? Or is it based on how well the hedge turns out?
 
Does anyone know if some firms say, ok you have $100 million in currency x coming in but you will be converting it to currency y, in the not too distant future. Let us monitor the given currencies and make the decision on when to hedge, if to hedge at all. If the hedge turns out to be beneficial, we take z% of the added benefit. If the hedge doesn’t really net your company any extra dollars, and in fact you would have been better off not hedging at all, we take nothing.
 
Most IBanks want to get paid whether the clients win or lose, so the short answer is no.

Read Das' "Traders, Guns and Money" if you want to learn about the often esoteric and convoluted world of FX hedging.
 
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