Hedging Policies

Establishing or modifying a hedging policy may be the most important issue your organization faces. The structure of any policy will dictate future hedge financing and execution as well as define appropriate structures. Cardea Partners works with private and public sector organizations to create effective and relevant risk management protocols. Cardea Partners uses a comprehensive approach to analyze or build the appropriate policy for your organization:

  1. Onsite meeting with key decision makers
  2. Presentation of findings of your organization’s existing procedures relative to potential needs
  3. Hedging policy template crafted and presented for board approval
  4. Ongoing services to keep our clients informed of key changes in the regulatory environment

Considerations when building a hedging policy

• Purpose and Scope (organizational needs, appropriateness, product breadth, key decision makers)
• Structural Risks (amortization, basis, credit , counterparty, refinance, tax, termination)
• Solicitation Methods (bid process vs. negotiation, collateral requirements, use of advisor)
• Reporting (documentation owners, frequency, accounting, schedule of policy review)

Next Application: Negotiated Savings