HSBC completes energy hedging trades

Successful completion of hedging trades corresponds with growing demand as it provides clients with enhanced risk management and investment solutions.

HSBC on Wednesday announced the completion of its first energy hedging trades in Hong Kong. The landmark executions are the first to be completed through HSBC’s strategic alliance with Total Oil Trading S.A. (‘TOTSA’), the trading arm of Total S.A. The completed trades correspond directly with growing customer demand for risk management and investment solutions designed to manage commodities exposure, according to an HSBC report.

The hedging trades were completed for two Hong Kong-based HSBC Commercial Banking customers with significant exposure in China’s growing oil, fuel and petroleum industries. To cater for their specific oil hedging requirements, energy-specific over-the-counter derivative products were deployed by HSBC to mitigate risk and exposure to volatile oil prices, Gordon French, Head of Global Markets Asia-Pacific, HSBC, said: “Commodities play a crucial role in the economic development of all markets and as exposure continues to evolve in Asia-Pacific, demand for sophisticated hedging products will follow suit. For HSBC, the closing of these landmark energy trades further reinforces our commitment to strategically expanding our commodities platform and deploying benchmark energy hedging product and solutions across Asia-Pacific."

HSBC Bank plc established its strategic energy trading alliance with TOTSA in mid-2010.

Under the alliance, each partner focuses on its core expertise: deal origination and credit risk management for HSBC and oil trading for TOTSA. HSBC also retains the relationship with its clients and the associated counterparty risks, while TOTSA’s manages exposure to energy by combining physical infrastructure and risk management capabilities to deliver energy derivatives.

The global alliance continues to evolve in Asia-Pacific and is consistent with HSBC’s global strategy of expanding its commodities trading capabilities to customers. HSBC’s heightened commodities commitment is complemented by its existing leadership in precious metals trading.

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