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Whether or Not to Collateralise the Hedging Process: That is the Question

Whether we like it or not, in future the hedging of financial risks may never be the same again.

In one sense, the dilemma is in choosing between significantly better hedging or trading terms - but with potential cash volatility and higher administrative cost in exchange, and poorer terms with no cash volatility or additional administrative cost.

Key Points

  • The requirement to post collateral
  • Questions to ask yourself
  • Possible solutions
  • So what would be advisable?

 

Written by

François Masquelier
Head of Corporate Finance and Treasury, RTL Group, and Honorary Chairman of the European Association of Corporate Treasurers
RTL Group

Tax & Accounting Series (15 articles)

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