A key role in financing the economy
Trading floors play a key role in financing the economy and in distributing risk among the various stakeholders. Trading floor professionals have market expertise, and the trading floors are organised to provide customised solutions to the sometimes highly complex problems of bank clients.
Hedging against foreign exchange risk
Consider a shipbuilder which makes long-term deals to sell goods in foreign currencies. This company runs a significant risk of exchange rate fluctuation. To protect itself, it uses the services of a trading floor.
Professor of finance, HEC Paris
Companies use the trading floors at banks to protect themselves against the risks incurred by their businesses. The role of these trading floors, much like that of insurers, is to assume these risks, manage them and distribute them among the operators capable of taking them on. The absorption and allocation of risk by trading floors is a virtuous phenomenon without which the economy could not function.
Head of fuel purchasing and risk management at Air France-KLM
Our fuel bill represents just under 30% of our operating costs. To control our production costs, we need to hedge against higher oil prices. A hedging policy cannot really be assessed based on the gains it generates. If a hedge earns money, that's not a good sign: it's almost as if a disaster had occurred!