Brady Hedging Solutions Aug-2014 Maumee, Ohio. Agenda What do you hedge? Who uses our software for...

Brady Hedging Solutions

Aug-2014Maumee, Ohio

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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 priceBuy & sell at different formula pricesFixed 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 activityCapture futures, swaps, averages and other derivativesBroker reconciliationMark-to-Market (MTM)AccountingAudit/complianceOption pricing and risk management if needed

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What solutions does Brady offer?

Combine your physical exposure with your hedgesConsolidated Risk reportingHedge EffectivenessWhat-if analysis

"Internal brokerage"Larger companies centralise hedging activitiesIndividual plants/sites/entities hedge with a central hedging desk (“internal broker”)Central hedging desk hedges with the marketAllows natural netting of hedgesProvides 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 installMinimal implementation and setup timeHedge Trade CaptureAutomatic Price upload and Mark To MarketBroker MTMPhysicals and Combined Risk

Importing Physical PositionsRisk Position Report

Hedge Contract AdministrationEnd Of Day Batch Process

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Hedging lifecycle

Identify the need to hedgeExecute trade with brokerCapture trade in the systemBroker sends the confirmation Reconcile with broker confirmation/statementEvery day

Broker sends margin call - initial margin and variation marginMTM for accounting Monitor risk position

At or before maturity Close out (unwind) future and realise P&L to offset physical gain or loss

orRoll position to another date/month

orAdd/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