UK-based investment bank HSBC has launched an analytics tool aimed at improving the effectiveness of foreign exchange (FX) hedging strategies for institutional investors.
Named FX HEAT (Hedge Efficiency Analytics Tool), the next-generation data service gives asset managers and institutions automated access to independent analytics reports.
The analytics include an overview of the performance divergence contributors between currency hedged and non-currency hedged investment returns, including market-driven and operational factors.
The bank said that through using the tool FX clients will be able to make decisions on optimising the FX hedging efficiency of their investments, a process which it added was essential during recent market turbulence.
“Investors want more clarity than ever before during uncertain times. They want to understand the costs and the risks associated with currency hedging for their fund portfolios,” said Vincent Bonamy, global head of intermediary services for markets and securities services at HSBC.
“FX HEAT can help clients strengthen their own internal governance with independent oversight of their FX strategies’ performance.”
FX HEAT also allows users to assess HSBC’s FX hedging strategies and their impact on returns on an ongoing basis and is set to be integrated into HSBC’s single dealer FX execution platform, HSBC Evolve, by the end of 2021.
HSBC has been focused on boosting its foreign exchange analytics offering so far this year, after launching a pricing chatbot that uses artificial intelligence to give clients instant pricing and analytics for FX options in February.
The new system, named Sympricot, aims to reduce operational risk and eliminate repetitive and unnecessary manual tasks previously associated with gathering complex trading information for clients.