The highly granular analysis of risk factors in hedging operations takes every element into account for the effective measurement of hedging relationships in compliance with regulations. From an economic perspective, this also helps to reduce fluctuations in the profit and loss account.
FlexFinance is a modular solution which processes economic hedging relationships in accordance with regulations. To this end, functions for hedge management, effectiveness tests, accounting as well as financial accounting are provided.
The software can support your company's micro-hedging strategies for long and medium-term debt instruments as well as treasury bonds and the loan portfolio. Thanks to IFRS 9 micro-hedge accounting incorporated in FlexFinance, the fair value option can be avoided to a large extent and thus volatility in the profit and loss account can be reduced.
A workbench including workflows, which guides you through the entire life cycle of a hedging relationship, is provided for management purposes. Intra and inter-departmental processes are digitalised by the workbench and thus made more transparent and traceable. This encompasses the capture, documentation, monitoring and adjustment of hedging relationships. Due to the possibility of rebalancing the financial instruments involved in a hedging relationship, the dynamics of your business model in a hedge can be complied with.
At present, the pricing of derivatives, particularly interest rate derivatives, is undergoing change. FlexFinance helps determine market-oriented prices as far as possible by using different discount and forward curves (multi-curve valuation process) and differentiates between highly granular valuation elements. In this way, risk factors that were neglected in the past, resulting in ineffectiveness, can be considered in isolation. Hedging costs, such as the FX basis spread for currency-swap transactions, the forward element in forward deals or the time value of an option, can be excluded from the hedging process. Risk factors are mapped as affecting or not affecting net income in the OCI.