Irish foreign exchange technology firm Assure Hedge is launching a service which it describes as aiming to ‘bring hedging to everyone’.
Hedging is a method – deployed by businesses usually – to protect against future changes in currency exchange rates, whether expected or unexpected.
Research indicates that while 80% of large companies with currency risks hedge their currency exposure, 80% of SMEs do not.
The proportion of individuals that use hedging is lower still.
Sudden unfavourable swings in currency values during a deal or while money is being transferred by individuals can result in significant losses.
To address the issue, Assure Hedge has launched a platform for embedded hedging called OpenHedge.
The company says the system addresses the issues of access, complexity and cost – three typical barriers to hedging.
“We need to reach the people who are not hedging today and we need to present a simplified solution to their currency exposure at the time that exposure arises. Without that, hedging will remain the privilege of only very large companies with treasury teams and corporate bankers,” Barry McCarthy, founder and Head of Embedded Hedging at Assure Hedge explained.
OpenHedge, which is already piloting the programme, says the solution is applicable to international payroll companies, universities and freelancer platforms, whose users are subject to future-dated currency exposures.
The company has entered into an innovation partnership with Accounts IQ, a cloud accounting software firm to deliver the service.
“AccountsIQ users have operations across over 80 countries so they deal in multiple currency transactions constantly and have exposure to FX rate fluctuations. By integrating with OpenHedge we can allow our customers to dynamically hedge their currency exposures based on actual transactions in AccountsIQ,” Tony Connelly, CEO and founder of Accounts IQ said.