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