C8 Technologies enhances FX hedging platform with carry strategies

Users of the platform will benefit from improved returns and strategy diversification when using its active hedging solution.

London-based fintech C8 Technologies is adding FX carry strategies to its FX hedging platform, C8 Hedge, in response to rate divergence re-emerging as a significant driver in currency markets.

Users of the platform will benefit from improved returns and strategy diversification when using its active hedging solution, according to the firm.

The platform is managed by Jonathan Webb, who previously served as head of FX strategy at Jefferies. He has also worked as a FX portfolio manager/proprietary trader at banks and hedge funds, including HSBC, Credit Suisse and Bank of America.

“At the heart of the FX carry trade is the idea that, as diverging economic performance is reflected in widening interest rate differentials, this interest differential can be harvested whilst currencies of better performing economies can also strengthen,” said Webb.

“From 2011 to 2022 the carry trade produced little return as interest rates converged towards zero. Today, however, interest rates in most major economies are much higher and we see a wider divergence in economic performance across the G10 going forward. This will drive larger differences between interest rates in major economies and offer more scope for profitable returns.”

C8 Hedge was launched in April, with the platform employing machine learning and statistical models to help predict future FX movements. This enables users to craft customised hedging solutions that align with their specific needs.

C8 Hedge asserts that their offering helps corporate treasurers and investment professionals effectively manage their currency exposures by offering precise guidance across a range of currencies through online tools.

“Now is the perfect time to add FX carry strategies into the C8 Hedge platform, giving users the potential for improved returns as part of our tailored service,” said Mattias Eriksson, chief executive at C8.

“We are thrilled by the interest we have seen in the platform since launch, and we believe that adding this strategy to improve the way users hedge their currency exposures will further increase its appeal to those seeking to optimally manage their currency exposures with minimal fuss.”