Brady Hedging Solutions
Aug-2014
Maumee, Ohio
Agenda
What do you hedge?
Who uses our software for hedging?
What solutions does Brady offer?
What does a hedging solution need to do?
Conclusion
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What do you hedge?
What needs hedging?
Inventory – do you / don’t you hedge?
Buy at fixed price, sell at formula price
Buy & sell at different formula prices
Fixed price commitments - contracted or offered
Do you want your profit to be affected by metal price moves?
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Who uses our software
Why types of companies use our software for
managing derivatives?
Fabricators / scrap dealers
Want to limit/remove exposure to metal price
moves
Banks + brokers
very different business - but very useful when your
broker is using the same system as you
Trading companies
different business - often your counterparties
Producers - mining companies
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What solutions does Brady offer?
Manage your hedging activity
Capture futures, swaps, averages and other derivatives
Broker reconciliation
Mark-to-Market (MTM)
Accounting
Audit/compliance
Option pricing and risk management if needed
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What solutions does Brady offer?
Combine your physical exposure with your hedges
Consolidated Risk reporting
Hedge Effectiveness
What-if analysis
"Internal brokerage"
Larger companies centralise hedging activities
Individual plants/sites/entities hedge with a central hedging desk (“internal
broker”)
Central hedging desk hedges with the market
Allows natural netting of hedges
Provides consistency + control
Reduces brokerage fees
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Hedge Manager Solution
Hedge manager solution provides an entry-level, packaged solution
for hedging for recyclers and fabricators
Hosted solution – no software install
Minimal implementation and setup time
Hedge Trade Capture
Automatic Price upload and Mark To Market
Broker MTM
Physicals and Combined Risk
Importing Physical Positions
Risk Position Report
Hedge Contract Administration
End Of Day Batch Process
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Hedging lifecycle
Identify the need to hedge
Execute trade with broker
Capture trade in the system
Broker sends the confirmation
Reconcile with broker confirmation/statement
Every day
Broker sends margin call - initial margin and variation margin
MTM for accounting
Monitor risk position
At or before maturity
Close out (unwind) future and realise P&L to offset physical gain or loss
or
Roll position to another date/month
or
Add/reduce hedge
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Conclusion
Whether basic or advanced, Brady has a solution to fit your hedging
requirements
Brady is the global #1 in the market for metals trading and risk
management
Benefit of using the same vendor as CRES
Further detail in the breakout session tomorrow morning
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