HSBC Unveils FX HEAT

HSBC has unveiled FX HEAT, a new tool for asset managers and institutional investors to independently analyse the effectiveness of their currency hedging strategies.

The bank says its FX Services team worked in collaboration with an independent quantitative specialist to provide the service, an acronym for hedge efficiency analysis tool, which allows users to access independent reports on an automated basis to enhance the governance and oversight of their foreign exchange hedging.

It provides clients with a detailed overview of the performance divergence contributors between currency hedged and non-currency hedged investment returns. These include a series of market-driven and operational factors. With this type of analysis, FX clients are able to make decisions on optimising the FX hedging efficiency of their investments, HSBC says.

FX HEAT is set to be integrated by year-end into HSBC Evolve, the bank’s single-dealer FX execution platform.

“Investors want more clarity than ever before during uncertain times,” says Vincent Bonamy, HSBC’s head of global intermediary services, markets & securities services. “They want to understand the costs and the risks associated with currency hedging for their fund portfolios. FX HEAT can help clients strengthen their own internal governance with independent oversight of their FX strategies’ performance.”

Sebastien Danloy, HSBC’s global head of asset owners & managers, markets & securities services, adds, “HSBC is one of the world’s largest custodians, providing asset owners and managers with access to our market-leading global FX business to manage the currency risk in their portfolios. FX HEAT will help our clients improve the efficiency of their operations with independent hedging efficiency analytics.”