New online FAS 133 tool developed for corporate hedgers

New York-based risk management system provider Reval has developed an online derivatives hedging service, Reval Express. It is intended to provide an affordable means for US corporates that hedge only lightly to comply with derivatives Financial Accounting Standard 133.

The online valuation and back-office reporting system will cost $6,000 a year for companies executing 10 hedging transactions a month. The price rises with greater transaction volume.

Dino Ewing, Reval's chief financial officer, said the service is a spin-off from Reval's more comprehensive risk management system, Reval Level 1, which was released in January 2001. Ewing added that Reval Express has five customers so far, all medium-sized manufacturers and farm credit institutions, but declined to name them.

Ewing described himself as cautiously optimistic about Reval Express's success. "A lot of it is convincing them why Excel is not an appropriate tool for this," he said, referring to the Windows Office spreadsheet calculator. Ewing claimed reliance on Excel for managing corporate risk exposures introduced human error concerns and made a poor database substitute. "Reval Express is lower cost than doing it internally,” he added.

Reval Express offers forex and interest rate modules, though clients have only signed to the rates facility so far. "The basic criteria is no optionality in the instruments and around 20 hedges," said Ewing.