Designated, tested, marked to fair value.
Aleq documents the hedge at inception, marks it to fair value, and tests effectiveness on the corridor you elected — the change routes to OCI, or through earnings for a fair-value hedge, on its own.
Document it, test it, then mark it.
Hedge accounting has to be earned — it starts with contemporaneous documentation and holds only while the hedge stays effective. Below is the GBP/USD forward.
Every cash-flow hedge, marked and placed.
Each derivative is carried at fair value, with its designation and the effective portion routed to OCI — or, for a fair-value hedge, both sides marked through earnings. Aleq keeps the whole book current and applies the reclassification whenever a hedged item is realized.
| Instrument | Notional | Fair value | Mark to |
|---|---|---|---|
| GBP/USD forwardcash flow · 98% | £2.40M | $12,140 | OCI |
| SOFR swapcash flow · match | $5.00M | $18,400 | OCI |
| EUR/USD forwardcash flow · 96% | €1.80M | $(14,200) | OCI |
| Net fair value | $5.70M | $16,340 | — |
Aleq documents and routes. Your team tests and elects.
Three moments in the same hedge's life — and one hedge type Aleq won't let you set up at all yet.
Aleq records the hedged item, the instrument, the risk being hedged, and the OCI account the mark routes to — dated to the trade, not backfilled. This is the record that makes everything after it eligible for hedge accounting.
Four hedge types. One routing rule each.
FX forwards and rate swaps route as cash-flow hedges with effectiveness computed on the dollar-offset corridor, fair-value hedges mark both sides through earnings, and net-investment hedges defer in CTA beside the translation they offset.
Lock the rate on forecasted sales — mark to OCI.
A forward hedging forecasted foreign-currency revenue is a cash-flow hedge: the effective portion sits in OCI and reclassifies to revenue when the sale lands. Each period Aleq computes dollar-offset effectiveness from the hedged item's change and routes the mark from there.
- Effective portion deferred in OCI until the sale hits earnings.
- Reclassification moved to revenue when the forecast occurs.
- Effectiveness computed by dollar-offset each period; a failed test dedesignates the hedge.
Turn floating-rate debt into a fixed cost.
A pay-fixed, receive-floating swap on variable-rate debt is a cash-flow hedge of interest payments. Once the period's effectiveness test passes, Aleq defers the effective portion in OCI and reclassifies it to interest expense as each payment settles, so the P&L sees a fixed rate.
- Pay-fixed swap converts floating interest to fixed.
- OCI deferral reclassified to interest expense each period.
- Critical-terms match supports a highly-effective conclusion.
Hedge a firm commitment — both sides hit earnings.
A forward hedging a recognized asset or firm commitment is a fair-value hedge: both the derivative and the hedged item are marked through earnings, so the gains and losses offset in the same period. Aleq carries the designation, marks both sides each period, and keeps the documentation dated to inception.
- Both marked to earnings derivative and hedged item, together, every period.
- Natural offset the two move against each other in the same period.
- Documented at inception designation drafted and dated — never backfilled.
Hedge a foreign sub — the mark lands in CTA.
A hedge of the net investment in a foreign operation defers its effective portion in the cumulative translation adjustment, alongside the translation it offsets. Aleq carries the designation, marks the instrument each period, and routes the effective portion to CTA within OCI — where it stays until the foreign operation is sold or substantially liquidated.
- Effective portion deferred in CTA within OCI, next to the translation it offsets.
- Offsets translation moves with the foreign-sub translation each period.
- Reclassification to earnings only on sale or substantial liquidation of the sub.
What controllers and auditors ask.
Put your hedge book on Aleq.
Connect your treasury book. Watch Aleq document each hedge at inception, compute effectiveness each period, and route the mark on its own — the designation drafted for your sign-off, the disclosure tied out.