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#1
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Any hedge transaction has associated costs... Commission (generally not applicable to FOREX) and the cost of the bid-ask spread.
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#2
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I have specifically dealt with hedging of this kind. From what I recall, the only slippage is the transaction cost. In the case of a fx fwd, there is no outright commission, but rather the desk providing the hedge would take their cut via the bid/ask spread. How competitive the points they offer you are dependent on your relationship with the desk(i.e. how good/big of a client you are).
To be honest though, this really isn't "that" big of a deal to a fund. These are nickels and dimes for them. |
#3
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[ QUOTE ]
I have specifically dealt with hedging of this kind. From what I recall, the only slippage is the transaction cost. In the case of a fx fwd, there is no outright commission, but rather the desk providing the hedge would take their cut via the bid/ask spread. How competitive the points they offer you are dependent on your relationship with the desk(i.e. how good/big of a client you are). To be honest though, this really isn't "that" big of a deal to a fund. These are nickels and dimes for them. [/ QUOTE ] Yeah the T cost is minimal, but Im seeing 30 bps a month in sliipage which seems high. |
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