Like many dealers, NatWest has for years had a tool that automatically trades in the underlying spot or forwards markets to replicate and hedge its foreign exchange options sensitivities.
Recently, though, the bank has given clients access to this tool – not to hedge their options but to replicate them in spot for those such as central banks that aren’t allowed to trade the instruments directly.
“The different usage we made of the tool is basically, if a client doesn’t have the right to trade in
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Read More: NatWest retunes options tool to create, not hedge