Explore every episode of the podcast The Trading Floor with David Axtell

Market makers price more than volatility. Client behaviour, inventory, liquidity and adverse selection all influence a quote. This episode explains how dealers interpret and manage flow.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 27 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

A hedging programme is more than a single trade. This episode looks at policy, layering, target redemption structures, governance and the danger of allowing cost reduction to become speculation.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 26 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Zero-cost corporate hedges are financed by giving up value elsewhere. This episode examines participating structures, collars and the trade-offs treasurers need to understand before signing.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 25 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Exotic books can hide concentrated risk near barriers and trigger levels. This episode focuses on scenario analysis, Greek aggregation and the practical management of non-linear exposures.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 24 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Written by Luigi Pascal Rondanini. Performed by AI actors.Compliance folklore still drives multi-million FX decisions — forwarded emails, draft papers, “the desk across the street.” This Deep Dive explains what Rondanini FX Risk Intelligence (FXRI) is (and is not): a continuously maintained professional reference with evidence attached — not a news ticker, retail app, or advice product.We walk through the six-point design test, evidence classes, the Verified badge, browser-side VaR/ES and policy tools, a 2LOD workflow with the Evidence Pack Builder, and the hard legal boundaries every desk should respect.FXRI: https://fxriskintelligence.comThe Trading Floor: https://thetradingfloor.rondanini.comRondanini Publishing: https://rondanini.comProfessional reference only — not financial, legal, regulatory, tax or investment advice. Primary sources prevail over summaries.Chapters0:00 Cold open — trading desk folklore0:55 Institutional folklore vs second line1:40 What FXRI is (and is not)2:12 Continuously maintained professional reference4:13 The six-point design test4:29 What is this? Does it apply now?7:59 Verified badge and legal disclaimer11:19 Tools vs library11:27 Deterministic calculators (browser-side)11:37 VaR / Expected Shortfall15:10 2LOD workflow in a live dispute15:50 Evidence Pack Builder19:18 Hard legal boundaries20:32 Not advice — named seats and accountability22:32 Close

Constant volatility is a convenient assumption, not reality. This episode introduces local volatility, stochastic volatility and other model approaches used to capture changing market behaviour.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 23 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Ask for the rate risk on a single-currency swap and you get one number: its DV01. Ask about a cross-currency swap and a single number is dangerously incomplete. Episode seven shows why the risk is a vector — projection and discount curves, in each currency, across tenors — and why the seductive error is collapsing it into one convenient summary. Host David Axtell covers key-rate risk and the curve twists a flat summary hides, how you hedge each factor with an opposite-signed instrument, and why hedging is a governed, dynamic process, not a trade you place and forget. Companion season to Cross-Currency Swaps and Basis Trading, out 15 December.

Listed and OTC currency options can share strike and expiry but differ in contract design, settlement, liquidity and margin. This episode explains why those differences matter in fast markets.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 22 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

When spot moves, the volatility surface can move in different ways. Explore sticky-strike and sticky-delta behaviour, Vanna exposure and why surface dynamics matter to hedging.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 21 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

OTC options, listed options and futures can hedge similar risks with very different liquidity, margin, documentation and operational consequences. This episode compares the market structures.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 20 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Attractive coupons in structured notes often come from embedded option sales. This episode breaks down the economic trade hidden inside the wrapper and the risks investors may actually be taking.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 19 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

FX options do not trade in isolation. This episode connects currencies with equities, rates, commodities and global risk appetite to show how cross-asset information changes pricing and hedging.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 18 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Central-bank decisions can lift implied volatility before an announcement and crush it afterward. This episode explains event risk, volatility repricing and the options market around policy meetings.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 17 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Emerging-market currencies add capital controls, non-deliverability, liquidity gaps and political constraints. Learn why standard FX option techniques need adjustment in restricted markets.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 16 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Two treasurers call the same dealer, the same morning, for the same swap — and get different numbers. Neither is being cheated. Episode six opens the gap between what a cross-currency swap is worth and what a dealer will quote you. Host David Axtell builds the clean par rate from a zero-PV condition, then decomposes the quote component by component — credit, funding, capital, operations, profit — and shows why the capital charge is very often the single largest piece. Plus why the same trade costs different clients different amounts. Companion season to Cross-Currency Swaps and Basis Trading, out 15 December.

Some of the largest losses on a derivatives desk come from process rather than market direction. This episode covers confirmations, settlement, controls, documentation and operational failure.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 15 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

How regulation and internal models turn market risk into capital requirements. Explore the link between options exposure, capital allocation and the economics of running a derivatives business.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 14 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Value at Risk can be mathematically correct and still miss the loss that matters. This episode examines confidence levels, holding periods, fat tails and why stress testing belongs beside VaR.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 13 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Autocallables and hybrid structures can look complex, but they are built from familiar option components. This episode decomposes the payoff and shows where path dependency enters the risk.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 12 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Variance swaps let traders take a direct view on realised versus implied volatility. This episode explains the payoff logic and how volatility can be traded without relying on market direction.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 11 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Basket options combine several currencies into one payoff. Learn how correlation creates the apparent diversification benefit and why that benefit can disappear when markets become stressed.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 10 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Asian options use an average exchange rate rather than a single fixing. This episode shows why average-rate structures fit recurring exposures and how averaging changes volatility and hedge behaviour.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 9 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

There's a number quoted daily on every major currency pair that, in theory, should be zero. It isn't, and hasn't been for nearly two decades. Episode five is the conceptual centre of the season: what the cross-currency basis measures, why covered interest parity broke in 2008 and never fully healed, and why it persists — balance-sheet costs and one-way hedging demand, not textbook mispricing. Host David Axtell proves with the book's own figures why a visible basis is not free money, and can turn a 15bp "pickup" into a six-figure loss. Companion season to Cross-Currency Swaps and Basis Trading, out 15 December.

Knock-in and knock-out barriers can radically change cost and risk. Understand how barriers behave as spot approaches the trigger and why discontinuous exposures require active management.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 8 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Digital options pay a fixed amount if a condition is met and nothing if it is not. This episode explains their discontinuous payoff, pricing behaviour and concentrated risk around the strike.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 7 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Calls, puts, spreads and collars translated into real treasury decisions. Learn how zero-cost structures are assembled and why no-upfront-premium never means no economic cost.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 6 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Why implied volatility is not one number. Explore smiles, skews, term structure and the way strike and expiry combine to create the FX volatility surface used for pricing and risk.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 5 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Delta, Gamma, Vega and Theta are the core language of options risk. This episode explains what each Greek measures and why traders manage the sensitivities rather than just the option price.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 4 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

How the classic Black-Scholes framework is adapted for currencies through two interest rates, forward pricing and the Garman-Kohlhagen approach used across FX options markets.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 3 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Why getting the currency direction right is not enough. This episode explains intrinsic value, time value, moneyness and the forces that can make an option lose value even when spot moves your way.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 2 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Before 2008, one yield curve valued a swap. The crisis proved that wrong. Episode four rebuilds cross-currency swap valuation from the ground up: why projection and discounting became two different jobs, how the cross-currency basis enters the price as a first-order component, and the sign convention that costs people real money when they get it backwards. Plus the idea that surprises everyone — the collateral you post decides which curve you discount with. Host David Axtell works the book's own figures throughout. Companion season to Cross-Currency Swaps and Basis Trading, out 15 December.

A practical look at how the decentralised OTC FX options market works, who provides liquidity, why bespoke contracts dominate, and how venue and dealer choice affect execution.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 1 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

David Axtell introduces FX Options Daily, a 30-day season of The Trading Floor built around the institutional practice of pricing, hedging, exotics and risk in foreign exchange options.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

The season introduction sets up the full 30-episode journey.

Educational content only. Nothing in this episode constitutes investment advice.

Why do two desks quote different prices for the identical cross-currency swap? Episode three goes inside the market's plumbing: the concentrated dealer panel, how the leverage ratio and balance-sheet costs shape who quotes, electronic RFQ versus voice execution, and what really drives the bid-offer spread. Plus the misconception that runs deepest — standard cross-currency swaps are still bilateral, not centrally cleared, and clearing transforms counterparty risk rather than eliminating it. Host David Axtell works a live collateral-terms example worth six figures. Companion season to Cross-Currency Swaps and Basis Trading, out 15 December.

If you can't describe every cash flow in a cross-currency swap, you don't yet understand it. Episode two builds the trade from the ground up: principal exchange (physical and notional structures), fixed-for-fixed, fixed-for-floating and floating-for-floating legs, day-count pitfalls, RFR lookback and lockout conventions, settlement across multiple holiday calendars, and the four-part ISDA architecture that makes it all enforceable. Host David Axtell walks through a full worked example and a basis-swap sign-convention trap that costs people real money. Companion season to the book Cross-Currency Swaps and Basis Trading, out 15 December.

Why do companies borrow in a currency they don't need, just to swap into the one they do? Episode one of The Trading Floor's new season introduces the cross-currency swap: the instrument connecting FX, interest rates and credit, born from a real 1981 IBM–World Bank trade and now underpinning a market worth tens of trillions. Host David Axtell explains comparative advantage, the basis, and why this market was reshaped after 2008. Companion season to the book Cross-Currency Swaps and Basis Trading, out 15 December.

The Trading Floor is a professional markets podcast from Rondanini Publishing Ltd.

Hosted in Season 2 by veteran FX-market practitioner David Axtell, the programme examines cross-currency swaps and basis trading from an institutional perspective. Episodes cover market structure, quotation conventions, principal exchanges, curve construction, valuation, basis behaviour, hedging, collateral, funding, capital, documentation and operational risk.

Designed for FX and rates traders, corporate treasurers, risk managers, quantitative analysts, finance professionals and advanced market practitioners.

Season 2 accompanies the book Cross-Currency Swaps and Basis Trading by Luigi Pascal Rondanini and David Axtell, published on 15 December 2026 as part of the Foreign Exchange Markets Professional Series.

Why do FX options sometimes behave very differently from what the pricing formula suggests?

In this episode of The Trading Floor, Luigi Pascal Rondanini explores the gap between financial models and the realities of the foreign exchange options market.

Models such as Black-Scholes, local volatility, stochastic volatility and SABR are essential tools—but every model is a simplification. Professional skill lies in recognising when a model is providing a useful approximation, when its assumptions are breaking down, and when model risk is becoming a material trading or hedging risk.

The episode introduces Luigi’s forthcoming book:

FX Options: Pricing, Hedging, Exotics, Risk and Institutional Practice

Book Two of the Foreign Exchange Markets Professional Series

The discussion covers:

FX option pricing and volatility surfaces

The difference between model risk and market risk

Hedging with forwards, vanilla options and exotic structures

Delta, gamma, vega and practical Greeks management

Corporate treasury hedging decisions

Volatility trading and relative-value strategies

Black-Scholes, SABR, local volatility and stochastic volatility

Why judgement matters more than the formula alone

The book draws on Luigi’s experience trading FX derivatives and advising corporate treasurers, risk managers and institutional clients.

Published by Rondanini Publishing in September 2026.

Learn more:

rondanini.com/fx-options

Podcast:

thetradingfloor.rondanini.com

Hosted by Luigi Rondanini

"A machine that refuses to guess is rarer than a machine that can talk."In this special bonus episode of The Trading Floor, David Axtell steps away from market stories to address a critical risk facing modern dealing floors: the "fluent wrong answer." Drawing on 35 years of experience, David explains why a chatbot inventing a P&L figure isn't just a novelty—it’s a firing offence.He introduces OrbaLM, a professional-grade control plane published by Rondanini Publishing® Ltd that ensures your AI never bypasses your authoritative tools. Unlike public SaaS chatbots, OrbaLM is a private, governed specialist runtime designed to sit inside your firm's own security boundary.

Key Takeaways:

• The Golden Rule: The model explains; governed tools calculate.
• Governed Calculations: Why FX options (Garman Kohlhagen), bonds, and IRS valuations must come from deterministic tools, not model prose.
• The Practical Heart: How OrbaLM integrates with the Excel workbooks the desk actually runs on, reviewing multi-tab files with full provenance.
• Founding Beta Offer: Details on the September shipping window and the unique "OrbaLM Promise"—keep the runtime for free even after the pilot ends.

Founding Pilot Details: Shipping starts in September 2026. Access is strictly by inquiry for professional desks.To Apply: Visit ⁠orbalm.orbaos.com⁠ or email

• Orbalm@orbaos.com from your company email address.

• Limit: One seat per company location.

Luigi Rondanini speaks frankly: the podcast, the books, the effort. FX Cash Products selling well. FX Derivatives out September. Book 3 with David Axtell in progress. Fiction, Market Myths, Commodities series. Thank you and goodbye.FX Cash Products book, FX Derivatives Products, cross-currency swaps book, Luigi Rondanini, David Axtell, Rondanini Publishing, FX professional series, learn rondanini, foreign exchange books, treasury books, financial markets education, FX options book, commodities energy markets book, Market Myths Mathematical Reality, The Trading Floor novel, Tom Fielding fiction, FX practitioner books, professional finance reference, treasury education, financial markets series, axtellconsulting, rondanini.uk

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 145+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net / rondanini.uk (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

Season One finale. David Axtell on the future of FX: AI, T+1 settlement, renminbi internationalisation. Book 2 (FX Options, sole-authored by Luigi) and Book 3 (Cross-Currency Swaps, David returns) both in progress. Ep 20.

future of FX, FX markets future, electronic FX trading, AI market making, algorithmic FX, T+1 settlement, FX settlement reform, CLS settlement, distributed ledger FX, CBDC FX, renminbi internationalisation, digital renminbi, CIPS, dollar reserve currency, FX regulation, non-bank FX, Basel III FX, Volcker Rule FX, FX markets evolution, FX technology, FX career, professional FX markets, trading floor podcast finale, season 1 FX

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 122+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

NDFs carry risks standard forwards don't. David Axtell covers delta exposure, EM VaR, stress testing peg breaks, fixing manipulation, CSA structures, operational controls, and governance frameworks. March 2020 included. Part V. Ep 19.

NDF risk management, NDF delta, NDF VaR, emerging market VaR, fixing risk, fixing manipulation, NDF stress test, currency peg break, CNY devaluation risk, INR risk, Turkish lira risk, NDF counterparty credit risk, credit support annex CSA, NDF collateral, NDF clearing risk, NDF operational risk, trade capture FX, confirmation matching, settlement reconciliation, NDF governance, position limits FX, contingency funding plan, March 2020 FX, EM currency crisis

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 122+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

Not all NDF liquidity is equal. David Axtell breaks down the three-tier market structure, how dealers skew quotes to manage inventory, when electronic beats voice, and why information leakage can cost more than the spread. Part V. Ep 18.

NDF liquidity, NDF execution, NDF market microstructure, NDF dealer, electronic FX trading, voice FX execution, multi-dealer platform, Bloomberg FXGo, Refinitiv FXall, 360T, dealer quote skew, NDF bid offer spread, best execution FX, transaction cost analysis TCA, FX algorithmic execution, TWAP FX, VWAP FX, NDF clearing, LCH ForexClear, central counterparty clearing, NDF bilateral execution, information leakage FX, dealer scorecard, emerging market FX execution

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 145+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

Capital controls block physical currency delivery. David Axtell explains how non-deliverable forwards solve that problem — settlement mechanics, fixing sources, NDF basis, and why $250B+ trades daily in markets you cannot physically touch. Part V. Ep 17.

non-deliverable forward, NDF, NDF settlement, NDF fixing, CFETS fixing, RBI reference rate, Bank of Korea rate, USD CNY NDF, USD INR NDF, NDF basis, capital controls, restricted currencies, cash settlement FX, emerging market hedging, CNY hedge, INR hedge, KRW hedge, BRL NDF, renminbi forward, SAFE regulations, offshore onshore basis, NDF mechanics, corporate FX hedge, treasury hedging emerging markets

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 145+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

Every payment, every currency, every day. David Axtell covers the treasurer's daily toolkit: FX swaps, repo, money markets, LCR, NSFR, intraday management, and stress testing. The practical reality of keeping operations funded. Part IV finale. Ep 16.

liquidity management, LCR, NSFR, Basel III liquidity, high quality liquid assets, HQLA, intraday liquidity, daily cash position, multi-currency management, CLS settlement, TARGET2, CHIPS, Fedwire, collateral transformation, repo, money market funds, treasury bills, commercial paper, contingency funding plan, stress testing, cash pooling, payment system cut-off, daylight overdraft, treasury toolkit, corporate treasury liquidity

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 122+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

Dollar swap lines. Reserve management. Intervention mechanics. David Axtell explains how central banks operate in FX markets, why verbal jawboning moves rates 1–2%, and how the Fed deployed $450B+ in swap lines during March 2020. Part IV. Ep 15.

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 145+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

$13 trillion of non-US bank assets funded via FX swaps. David Axtell explains synthetic dollar borrowing, why the cross-currency basis never disappears, Japanese megabank strategy, and the quarter-end effects every treasurer must plan around. Part IV. Ep 14.

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 145+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

$3.8 trillion a day. More than spot. More than forwards. Yet most practitioners can't explain them clearly. David Axtell breaks down FX swap structure, swap points, short-dated variants, and why the cross-currency basis never disappears. Part IV. Ep 13.

KEYWORDS:FX swaps, foreign exchange swaps, swap points, cross-currency basis, FX swap structure, near leg far leg, overnight swap, tom next swap, spot next swap, O/N T/N S/N FX, FX swap funding, synthetic borrowing FX, covered interest parity, FX swap pricing, interest rate differential, FX swap settlement, CLS settlement, rolling FX swap, FX swap vs forward, basis swap, post-crisis FX, Basel III swaps, liquidity management FX, treasury swaps

RELATED RESOURCES:

• Book: FX Cash Products — available now through all major bookstores and rondanini.com
• Education platform: learn.rondanini.com — 122+ professional mini manuals plus Python toolkits
• Consultancy: rondanini.net (Luigi Rondanini) · axtellconsulting.net (David Axtell)
• Podcast website: thetradingfloor.rondanini.com

Your hedging programme works perfectly. The economics are flawless. Then five million dollars appears as a loss in your quarterly earnings — and nobody told the CFO.

Episode 12 tackles the topic most treasury professionals avoid: hedge accounting. The accounting frameworks that determine whether your derivative gains and losses end up in the right place on your financial statements. David Axtell explains why getting this wrong can create exactly the earnings volatility your hedging programme was supposed to prevent.

The core problem is timing. Without hedge accounting, a forward contract's fair value change flows through earnings immediately — this quarter. But the exposure it's hedging might not hit the income statement until next quarter, when the sale is recognised or the payment settles. Same economic outcome. Different quarters. Artificial volatility. Confused analysts. Unhappy CFO.

Hedge accounting solves this by deferring the effective portion of hedge gains and losses to other comprehensive income until the hedged transaction affects earnings. Both sides recognised together. Net impact near zero. Earnings smooth.

David walks through both major frameworks: ASC 815 under US GAAP with its bright-line eighty to one hundred and twenty-five percent effectiveness threshold, and IFRS 9's principles-based approach requiring demonstration of economic relationship, credit risk assessment, and hedge ratio alignment. He explains why the ASC 815 cliff edge — where seventy-nine percent effectiveness triggers immediate reclassification of all accumulated OCI to earnings — creates precisely the volatility hedge accounting was designed to prevent, and how IFRS 9's rebalancing provisions represent a genuine improvement.

The episode covers the three hedge accounting categories (cash flow, fair value, net investment), the critical terms match shortcut that eliminates quarterly quantitative testing, and the absolute requirement for contemporaneous documentation before trade execution. David shares war stories of companies losing hedge accounting qualification because documentation wasn't completed before the trade went through.

This is the Part Three finale. Next up: FX Swaps — the most traded instrument in currency markets that most people outside the dealing room have never heard of.

Next Episode: FX Swaps — structure, mechanics, and why over three trillion dollars trades daily in an instrument most textbooks barely mention.

Based on: Chapter 10 of FX Cash Products by Luigi Rondanini and David Axtell, forthcoming from Rondanini Publishing.

Knowing what a forward contract is won't help you if you don't know how to use it inside an organisation.

Episode 11 moves from theory to practice. David Axtell walks through how corporate hedging programmes actually work — the policies, the ratios, the instruments, and the mistakes that cost real money when treasurers get it wrong.

He starts with the three types of FX exposure every international company faces: transaction exposure from committed cash flows, translation exposure from consolidating foreign subsidiaries, and economic exposure from competitive positioning. Most companies only manage one of them properly. David explains why transaction exposure gets the attention, translation exposure usually isn't worth hedging, and economic exposure can't be solved with forwards alone.

The heart of the episode is programme design. David uses the example of a US technology company with two and a half billion euros in annual European sales to demonstrate graduated hedge ratios — one hundred percent for committed orders, eighty percent next quarter, sixty percent for pipeline, forty percent for estimates. The result: seventy percent overall coverage weighted by certainty. Elegant. Practical. And aligned with how confident you actually are that exposures will materialise.

He covers rolling hedge programmes for companies with recurring monthly flows, explaining the mechanics of continuous forward coverage and why it delivers budget certainty at minimal cost. Then he tackles the most common mistake in corporate hedging: measuring performance by comparing hedge rates to spot outcomes. His line captures it: that's like cancelling your car insurance because you didn't have an accident.

The episode closes with instrument selection beyond vanilla forwards — window forwards for flexible timing, participating forwards for uncertain exposures, and zero-cost collars for range protection — matching each instrument to the exposure characteristics it's designed to serve.

Next Episode: Hedge Accounting — IFRS 9, ASC 815, and why getting the accounting wrong can undo everything your hedging programme was designed to achieve.

Based on: Chapter 9 of FX Cash Products by Luigi Rondanini and David Axtell, forthcoming from Rondanini Publishing.