Hedging pipeline risk

Market view by Robert Benson

robert-gif

Retail providers that offer structured products are typically faced with having to manage so-called pipeline risk. This arises from the fact that the terms of the product have been fixed for the investor but the volume of final sales is unknown until the end of this period, while the price of the underlying assets used to hedge the product (i.e. the underlying derivatives) will vary.

Since the price of the derivatives will fluctuate, providers usually estimate the expected total sales in advance

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: