Hedge Accounting for FX Option - Group Ledger IFRS

The Hedge Management and Hedge Accounting process helps you to mitigate profit and loss volatility from the use of derivatives.

Currently the scope item supports IFRS 9 and covers Cash Flow Hedge using European Style FX Option as Hedging Instruments.

The functionality helps you to automate labor-intensive processes, such as calculate net open exposure amount, create hedging relationship for hedge item and hedge Instrument, determine the key figures calculation (NPV, Intrinsic Value, Time Value, CCBS, CVA/DVA), perform the valuation of FX Transaction, check classification, process balance sheet crossover, deal with the de-designation and generate posting journal reports.

Key Process Steps Covered

  • Define hedging area based on hedging policy
  • Enrich, upload and release forecast and planning data
  • Determine net open exposure and make hedging decision
  • Execute FX transactions
  • Prepare and release designation
  • Determine NPV, execute valuation, and classification at period end
  • De-designation and reclassification at contract close
  • Postings

Benefits

  • Provide an overview of net open exposure amount
  • Support the management of hedge accounting
  • Reduce manual operation, such as hedge relationship mapping, designation, and classification
  • Make better operational and strategic decisions using the comprehensive reporting and analysis tools