Citigroup has launched the AutoFX Passive Hedge service to provide institutional asset owners with a passive, automated hedging capability to lower foreign exchange risk. 

The service provides new levels of flexibility, transparency and efficiency to the FX marketplace.

By using set standing instructions to execute FX contracts based on the securities portfolio valuation, AutoFX Passive Hedge smoothes out the influence of currency fluctuations in the overall return to international investment portfolios.

"Our clients will further benefit from this seamlessly integrated custody and FX offering providing a complete STP solution from deal determination and execution through to payment processing and FX confirmations," says Neeraj Sahai (pictured), Citi’s global head of securities and fund services.

A key feature of Citi’s AutoFX Passive Hedge is its automated “trigger” functionality.  Once the hedge parameters have been established, it automatically executes and continuously monitors, and adjusts back to the target hedge ratio based upon pre-set thresholds. This results in reduced currency exposure and reduced costs in managing this exposure.