As a Swap Advisor, HilltopSecurities has extensive experience assisting our clients in integrating interest rate derivative products into a fixed income portfolio as a risk mitigation strategy. In cooperation with our financial advisory practice, HilltopSecurities performs rigorous due diligence review of a client’s outstanding fixed income instruments in conjunction with existing and future debt issuances or purchases. This analysis quantifies the level of swap exposure a client can tolerate without negatively impacting its current underlying ratings. As your swap advisor, HilltopSecurities can assist you in designing an appropriate interest rate hedging program that incorporates industry standards and best practices. Through these best practices, we are able assist you in minimizing the risks associated with interest rate derivative products, such as termination risk, collateral posting risk, counterparty termination credit risk, basis risk and tax event risk. Most importantly, HilltopSecurities can independently evaluate suitability and fair pricing, thus satisfying your organizations's requirement to certify that it has exercised independent judgment in evaluating hedging transactions in a post-Dodd-Frank environment.
As a Commodity Trading Advisor, HilltopSecurities is licensed and regulated by the National Futures Association under the authority granted by the Commodity Futures Trading Commission (CFTC). HilltopSecurities advises clients on physical commodity hedging programs for diesel fuel, gasoline, natural gas and electricity, among others. Our team assists with evaluating correlations of actual purchase prices with available commodity benchmarks or indexes. We advise on the development of suitable commodity risk management programs, and perform required staff and board education. As in our swap advisory practice, HilltopSecurities helps you satisfy all Dodd-Frank regulatory compliance requirements.
No one hedging program is right for all users. Program expenses and risks will vary from program to program; however, in all cases, implementing a hedging program requires up-front work to determine feasibility and program requirements as well as the development of documentation that supports the program and individual trade execution.