By Ashley Groves, CEO, Deaglo. Market data as of 4 November 2026, 15:04 UTC.
Short answer: before you hire an FX hedging adviser, ask four things: how they are paid, whether they also execute trades, how they will show what you paid against market mid, and what they will put in writing about your policy. The aim is to separate advice from execution, so you can see what hedging costs you and who earns what on each trade.
The 12 questions below fall into four groups: independence, process, pricing and reporting. Each has a note on what a clear answer looks like. They apply to any adviser, including Deaglo.
Why does the choice of FX adviser matter?
Hedging decisions feed straight into fund IRR, gross margin and covenant headroom. Many companies and funds get FX advice from the bank that also prices their trades, with the advice paid for through the spread. That model is common and can work, but the incentives differ from an adviser paid a fixed fee. Knowing which model you are buying is the starting point.
Questions on independence and incentives
- How are you paid: a fee, a share of the trading spread, or both? A clear answer is in writing, with the fee or the basis points stated.
- Do you execute trades yourself, or receive any revenue from the banks you recommend? If yes, ask how that is disclosed on each trade.
- Which counterparties do you work with, and how do you choose among them? Look for several banks and a stated selection process.
- Which regulators are you registered with? In the US you can check NFA membership and CFTC registration yourself in NFA's BASIC database.
Questions on process and policy
- Will you start from our exposures or from a product? A sound process maps each exposure first: currency, amount, timing and how certain the cash flow is.
- Will you help us write a hedging policy? It should set objectives, hedge ratios by tenor, allowed instruments, counterparty limits and who can trade.
- How will you choose between forwards, NDFs, options and collars for us? Ask for the costs and risks of each in writing: rolls settle in cash, bought options cost a premium, sold options bring margin calls and can create large losses.
- What happens when our forecast changes? Ask how over-hedges, rolls and early close-outs are handled, and what they cost.
Questions on pricing and cost
- How will we see what we paid against market mid on every trade? A clear answer is a trade-by-trade record of the mid at execution, the rate dealt and the difference.
- Will you run competitive quotes and keep a record of them? Two or three quotes per trade, kept on file, let you check the process later.
- What is the all-in yearly cost of the programme? That means spreads, premiums, credit charges and cash used for margin, shown separately from forward points.
Questions on reporting and accountability
- What will you report, how often, and can our auditors rebuild it? Look for monthly or quarterly reports of exposures, hedges, mark-to-market and hedge results, and support for hedge accounting under IFRS 9 or ASC 815 where you use it.
What does a price markup cost? A worked example
Illustrative example. Figures are simplified to show the mechanics. They are not a projection, a quote or the results of any Deaglo client.
A Mexican company buys USD 10 million 12 months forward against pesos. USD/MXN on 4 November 2026, 15:04 UTC:
- Spot, mid: 18.6667
- 12-month forward, interbank bid / ask: 19.1040 / 19.1203
- 12-month forward, mid: 19.1122
- Hypothetical rate quoted to the company: 19.2116
The forward sits about 0.45 pesos above spot. Those forward points reflect the interest-rate gap between the peso and the dollar, about 2.39% a year. They are not a fee.
The hypothetical quote of 19.2116 is 0.52% above the forward mid. On USD 10 million that is about MXN 1.0 million, or roughly USD 52,000, for one trade. The interbank half-spread at the time was about 0.04%. Question 9 is how you would see this number on every trade.
Rates are Deaglo Maestro indicative mids and interbank bid/ask, 4 Nov 2026 15:04 UTC. They are not quotes. Realised one-year USD/MXN volatility was 8.6%, so the peso can move by more than the markup in a few days; the markup is still a cost you can measure and negotiate.
Which answers should worry you?
- "Our advice is free." It is usually paid for through the spread.
- A product is recommended before your exposures are mapped.
- No one can show you the mid at the time of a trade.
- Sold options or structured products are proposed with no margin stress test.
- Every trade goes to one bank.
- "This hedge eliminates your FX risk." Hedging changes the risk you carry; it has costs, and a hedged position can perform worse than an unhedged one.
What does a good adviser relationship look like?
In our view, as of 4 November 2026, the clearest set-up separates the person who designs the hedge programme from the bank that prices each trade, with every trade measured against mid. That view rests on the cost mechanics above: a markup is easy to miss when the adviser and the price come from the same place. Whatever model you choose, get the fee, the policy and the reporting in writing before the first trade.
Learn how Deaglo approaches FX risk management.
About the author
Ashley Groves is CEO of Deaglo. He has spent more than 15 years in institutional FX. Deaglo provides FX risk analytics and advisory services.
This article is for general information and education only. It is not investment, legal, tax or accounting advice, and it is not a recommendation or solicitation to enter into any transaction. Trading foreign exchange, forwards, options and other derivatives involves substantial risk of loss and is not suitable for every person. Hedging reduces some risks but has costs, and a hedged position can perform worse than an unhedged one. Opinions are Deaglo's as of the publication date and may change. Prices and market data are indicative as of the time shown and are not quotes.
