Bloomberg selected by Banorte to support regulatory compliance for monitoring derivatives hedging

The adoption of Bloomberg’s MARS Hedge Accounting offering, alongside MARS Front Office and MARS Counterparty Risk, will provide the firm with a complete set of risk management capabilities.

Mexican financial firm Grupo Financiero Banorte has adopted Bloomberg’s MARS Hedge Accounting solution to determine the effectiveness of hedges that are recommended to clients under various market conditions.

In addition, Banorte uses MARS Front Office and MARS Counterparty Risk solutions, alongside MARS Hedge Accounting, which offer the firm a complete set of risk management capabilities. 

MARS Hedge Accounting’s functionality supports the documentation, evaluation and measurement of the impact of hedges, and is designed to help clients comply with US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

By using MARS Hedge Accounting, Banorte will be able to calculate the effectiveness of its clients’ derivative hedging strategies to mitigate interest rate risk.

“Innovation and adherence to best practices is an essential part of our business in financial risk management,” said Abraham Izquierdo, Banorte’s managing director for risk and trading.

“We are always looking for new ways to deliver value to our clients and the implementation of MARS products provides us with the latest technology for robust processes to underpin and optimise risk management, aligning risk management with the strategic vision of our institution.”

The performance of the recommended hedges can be tested by Banorte by using a retrospective and/or prospective approach, allowing the firm to comply with some of the requirements of the Central Bank’s new derivatives rules.

MARS will also help address increasing requirements for hedge accounting and related financial instrument regulations.

“We are pleased to continue to support Banorte and deliver value through MARS Hedge Accounting to help them realise additional efficiencies in both their workflow and the workflow of their clients,” said Rachid Lassoued, global head of financial engineering and risk at Bloomberg.

“The use of MARS Hedge Accounting will allow for further transparency into their hedge accounting practices and assist their clients to assess their hedging strategies reliably and regularly.”