Foreign Exchange Hedging is Crucial for International Trade:
Comparing AvaTrade Options vs MoneyCorp
Companies who do international business are aware of the risks associated with foreign exchange (FX). Even the strongest currencies have some volatility nowadays, and changing exchange rates can lose corporations millions. For this reason, more and more companies are making use of currency hedging. FX options such as forward contracts allow businesses to allay their risks.
This should be a priority for any company that does any amount of trade overseas. Small currency fluctuations have a significant impact on profits, and sudden drops could cripple an unprepared business. While this could lead to unpredicted gains if the currency swings in a direction that favours the company, hoping for such a thing is little more than a gamble.
Instead of sitting and waiting to see what happens, it is good practice to reduce currency risks in whatever way possible.
The impact of Brexit on UK-based importers
We can use the case of Brexit to see how important foreign exchange for businesses is. When it was revealed that the UK had voted to leave the EU, the pound sterling plummeted. For UK-based importers, this meant usual imports suddenly cost a lot more.
In turn, importers need to push prices higher, affecting UK citizens and their own sales. And, of course, they cannot do that as soon as the currency swings. They need to wait and assess the damage and the likelihood of future swings.
In the meantime, they lose out on a lot of revenue. Predictions and budgets go out the window. In the case of a big corporation, it can cause huge damage. With smaller businesses, currency swings can be terminal.
Foreign exchange companies
The solution is to set up forward contracts and the like in advance. This can save money and allow businesses to increase the stability of their projections. There are, fortunately, companies that provide foreign exchange for corporations, making the process relatively easy.
Two of these companies are:
- Ava Options by AvaTrade
AvaTrade is a popular company that provides foreign exchange for businesses. They have been in the business for 10 years with no regulatory hiccups. They are regulated in Europe through the Central Bank of Ireland, in Japan through Financial Futures Association, and in Australia by ASIC.
Aside from regular FX options for companies, they also offer retail forex traders the platform to make money by leveraging trades for profits. This, however, should not be an important factor for those looking for currency hedging for their businesses.
- MoneyCorp Corporate FX Solutions
MoneyCorp has the advantage of a long, illustrious history and an excellent reputation. The company has existed in varying forms since 1962, trading in Forex since 1979. They are the second largest Forex company in the UK, trading over £10 billion every year, and are known to be highly reliable. They are regulated by the Financial Conduct Association (FCA) and HM Revenues and Customs (HMRC). They do not offer leveraged trading, instead functioning purely for money transfers for individual clients and corporate FX.
AvaTrade VS. MoneyCorp
Online only, no direct human contact
Online, call, or visit in office
No dedicated corporate FX dealer
Constant support from dedicated corporate FX dealer
For people who hold financial positions in organisations
For anyone looking for solutions
A range of currency hedging options
Licensed Forex provider
Recently acquired banking license from Gibraltar
Strong, 10 year reputation
Decades of reliability
For people who just need an online platform, AvaTrade Options can be an excellent solution. Despite being relatively young compared to MoneyCorp, they have a strong reputation and have had not regulatory problems. They may appeal to a younger generation suspicious of the more established financial services providers.
However, it is hard to compete with MoneyCorp, who have been dealing in Forex for almost 40 years. They trade over £10 billion a year, and now that they have a banking license, they’re more business oriented. Furthermore, their dedicated dealers make it a lot easier on those in charge of the company’s Forex policies. Their currency hedging offerings are suited to any and every business, and their success shows it.
So, unless you’re looking for the simplest option, or intend to trade Forex with leverage, MoneyCorp is hands down the best option for corporate FX. Read more about spot forex VS future contracts here.