Chapter 1 Why? Discusses why you might consider mandatory execution, whether a hedging program right for you, and introduces the basic premise behind this book – a safe method of managing pipeline risk while maximizing profits.
Chapter Sections: Why Mandatory?; Is Hedging For You?; About This Program
Chapter 2 The Economic Argument Offers a detailed illustration of the costs and benefits of a hedging program, including examples for different pipeline volumes and mandatory price advantages. Provides recommendations for determining the right best efforts and mandatory mix for your pipeline.
Chapter Sections: Show Me the Money; Pick Your Battles
Chapter 3 First You Make a Roux Lists the things that must be done before you can implement mandatory execution.
Chapter Sections: Warehouse Approval; Relationships with Broker/Dealers; Investor Approval; A Relationship with an Advisory Firm; A Centralized Lock Desk; Reliable and Accurate Pipeline Data; Secondary Marketing Manager
Chapter 4 The Basics Discusses the basic mechanics behind hedging, how the math works, and the instruments to use in hedging the pipeline. Presents issues of data integrity and pipeline fallout.
Chapter Sections: So, How Does It Work; Hedging Math 101; What’s So Great about TBAs?; Dealing with the Data; Big Bad Fallout
Chapter 5 The Daily Routine Outlines the step-by-step activities the marketing manager must complete each day. Provides an 6 day example that addresses different scenarios and the decisions behind them. Provides specific detail about timing sales and the differences in working with mandatory desks.
Chapter Sections: The Jargon; The Daily Routine; 6 Days in the Life; Timing is Everything; Managing Basis Risk; How Far Do I Go?; Selling To the Mandatory Desk
Chapter 6 Taming TBAs Provides detailed information about managing TBAs and how to work with brokers. Provides examples of activities and the logic behind them and a suggested trade tracking matrix.
Chapter Sections: Rolling Coverage; Trading Lingo; Tracking TBA Details; Market Volatility; Staying On Track
Chapter 7 Cool Things about a Hedging Program Discusses the benefits of hedging that go beyond simply a price advantage. Presents several potential traps to watch for and how to mitigate them.
Chapter Sections: Fun with Arbitrage; Products of Your Very Own; Better Investor Relationships; Get More Efficient; Pitfalls
Chapter 8 The Nitty Gritty Examines the details that must be addressed to properly manage a pipeline and provides suggestions and examples. Presents tools that improve overall management of pricing, sales, and pipeline management.
Chapter Sections: Lock Policies; Risk Management Policy; Pricing Policies; Exposure Limits; Measuring Results; Mark-to-Market; Market Data Services; Best Execution Models; Operational Changes; Secondary Marketing Expertise; Put Your Data to Work; Investor Price and Guideline Changes
Chapter 9 Watching the Market Lists economic reports to watch for and the potential impact of market changes on rates and your pipeline.
Chapter 10 The Future Presents opportunities to expand your hedging program in the future.
APPENDIX A Basic Reports
APPENDIX B Implementation Checklist