Foreign Exchange Advisory Services

WATC works closely with each client to understand their individual business requirements, identify FX risks and ensure they have the necessary information to make informed decisions on how to manage those risks. WATC makes its systems, experience and expertise available to clients to help them identify and quantify their foreign exchange exposure. WATC then works with them to design a risk management strategy that aligns with their individual businesses goals.

Reducing credit risk

Ongoing management of credit risk associated with long-dated foreign exchange contracts can be a significant issue for many organisations. When WATC undertakes foreign exchange transactions for a client, the client’s exposure is to WATC – a AA+ / Aa1 rated, government guaranteed entity. It is WATC, in its transaction with the financial markets, that assumes and manages the credit risk with market counterparties.

Reducing operational risk

Before WATC can undertake foreign exchange transactions on behalf of a client, the client must execute a Foreign Exchange and Derivatives Master Agreement. The agreement has been specifically designed to reduce clients’ operational risks in dealing with foreign exchange contracts through the inclusion of stringent process controls at all stages of a foreign exchange transaction, including standard settlement instructions, authorised signatories and transaction confirmation protocols.

The agreement sets out the responsibilities of both WATC and the client in relation to requesting, settling and confirming foreign exchange transactions.

WATC’s foreign exchange services include:

  • Risk management advice – identification, measurement and structuring of tailored client solutions to manage FX risk in procurement, specific projects and revenues.
  • Transaction services – execution, settlement (payment and confirmation) and valuation reports.
  • Financial Modelling – provision of quantitative measures of FX risk (in the form of probabilities, currency rates and diagrams), to assist clients to make informed decisions regarding their currency risk management strategies.
  • Policy advice – assistance with the development and/or review of treasury risk management policies to establish internal guidelines for client FX management.
  • Education – provision of in-house training sessions and materials to increase awareness and sophistication of client staff.