While you focus on your business and finances, this service lets you completely outsource forex rate booking process with banks. This is done by authorizing Myforexeye to transact the remittances on your behalf.
“This is where the client entrusts Fraktal with managing its entire treasury function from end to end.”
Fraktal thoroughly analyzes the client’s business model and risk appetite. This helps ascertain the funding requirements and the hedging philosophy. Fraktal then works with the client to draft a risk management policy that articulates the choice of instruments for borrowing, investing and hedging.
Drafting a Risk Management Policy
The policy clearly specifies how much is to be hedged and how much is to be kept open (i.e. establishes a minimum hedge ratio)
What fraction of exposure is to be hedged through forwards v/s what is to be hedged through options?
In case of exposures hedged through options, how much is to be hedged with Risk Reversals v/s how much with Plain Vanilla options?
In case of open exposures, what should be the take profit and stop loss levels?
The policy clearly lays down the mechanism for hedging contracted and anticipated exposures and does away with arbitrariness. Having a comprehensive Risk Management Policy sets the tone for a standardized and efficient treasury management process.
Seamless Information Flow
After having devised a hedging framework, in order to ensure its effective implementation, it is necessary for relevant information to flow between the client and Fraktal on a timely basis. Fraktal works with the client in ensuring that information regarding underlying exposures is transmitted in a standardized and timely manner.
Managing day to day coverage
After having obtained the relevant information on underlying exposures, Fraktal covers exposures on behalf of the client. The execution desk at Fraktal ensures that the client gets accurate quotes on spot, forwards and options at all times.
ALM and investment management
Fraktal ensures that the surplus funds are optimally deployed i.e. enhancing yield while ensuring adequate liquidity to take care of outflows.
MIS and Performance Reporting
Fraktal maintains a log of the performance in a standardized format i.e. how the hedge rates compare with underlying contracted exposures’ rates and reports them to the client periodically.
Ensuring accounting and regulatory compliance
Fraktal ensures that all relevant regulations are adhered to and that the treasury performance is reported as per the prevailing accounting standards.
Managing banking relations
Advisors at Fraktal assist the client in setting up funding lines with the bank or availing trade finance facilities. It helps the client negotiate the terms of the facilities with the banker.
What is Transaction Process Outsourcing (TPO)?
Transaction Process Outsourcing (TPO) is a concept devised by Fraktal to bring Treasury front office services to corporate and HNI clients in India. The service helps corporate limit transaction costs in the forex markets by bringing transparency at affordable cost.
How can we get assistance from Fraktal to automate the forex rate booking process? And what are the costs associated with this?
The customers need to get Fraktal dealer authorized from their respective banks to allow them to cover transactions from their respective banks. TPO customers pay annual charges which are dependent on annual forex volumes. More than 300 customers avail this service currently.
Our bank doesn’t inform us before applying rates to forex transactions. What can we do?
Yes, we are aware of such practices. This largely happens in case of MNC, IT/ITES clients who are not bothered to check rates. We suggest you to immediately instruct your bank to seek disposal instructions from you before applying rates. Disposal instructions make it mandatory for banks to call clients and quote rates before converting currencies.