KAS BANK, the specialist provider of securities services to the UK pension industry, is harnessing the latest in fintech to deliver a step change in how pension schemes manage and implement fund specific currency hedging strategies, with the launch of KASHedge.
This overlay solution will provide pension schemes with a consistent method for predicting and managing currency risks, allowing them full control over their hedging strategies whilst providing transparency and creating cost efficiencies. By enabling clients to implement one currency hedge based on the aggregate currency risks across the full portfolio, costs efficiencies are proven to be profitable of up to 10 basis points; based on research by KAS BANK utilising our cost transparency experience.
Working in close partnership with fintech specialists MatchingLink the newly available overlay solution is a combination of a powerful calculation engine and a state-of-art workflow manager, running on an online platform. The solution is specifically designed to provide a bespoke and tailored currency overlay service for schemes of all sizes and giving pension funds first time access to ‘look-through technology’.
For pension schemes with pooled investments, KASHedge identifies true exposure to aggregate currency risks across the full portfolio by utilising proven look-through capabilities. Via seamless integration between the fund accounting and treasury platforms of the bank, the straight through processing (STP) overlay solution ensures strengthened governance around foreign currency hedging.
KASHedge provides greater transparency around the hedging workflow and necessary transactions to help our Overlay Managers focus on providing their expert judgement on currency risks. Furthermore, the online nature of the platform allows scheme managers and their consultants or advisors to play an active monitoring role by accessing the dashboard directly.
Modernising standard practices, giving trustees flexibility when mapping investment strategies and recognising regulatory pressure to demonstrate thorough governance; this solution will make currency hedging services relevant and accessible to all pension funds and provide further transparency and efficiencies to those pension schemes already active in this space.
Matthijs Verweij, Business Development Risk Solutions commented:
“With a proven track record in custody, reporting and administration services, KAS BANK is best placed to calculate specific currency exposure in portfolios. Our commitment to fintech development in the pension industry means we’re able to work closely with best in class partners and deliver unique solutions as custodian, fund accountant or ‘data hub’.”
“Ensuring our services meet the changing needs of our clients is at the core of our proposition and with our experience in the Dutch pension market, we are confident that KASHedge will solve currency hedging complexities and support the overall progression of the UK pension sector.”
Pat Sharman, UK Managing Director commented:
“Trustees in the UK market are increasingly under pressure to demonstrate high governance standards of pension schemes with subsequent reporting. As a fintech innovator, we want to assist with these challenges across the investment cycle and believe adoption of the latest tools and working with leading fintech partners is the most efficient and accessible way to do so.”
Friso Postma, MatchingLink Managing Partner commented:
“KAS BANK has proven to be an excellent partner to develop a currency implementation of our Artificial Intelligence solution. Innovative thinking, agile working and the ability to think the start-up way, have been very valuable to us. The implementation process has resulted in a solution we are all very proud of.”
ASHedge as an innovative fintech solution for currency overlay reflects KAS BANK’s commitment to innovation and driving positive change across the pensions market. As well as practical innovations for currency overlay the business is working on a pipeline of future activity that reflects its position as an industry governance champion.