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Alexander Hamilton Awards

Winning the Battle Against Won Exposures

Congratulations to eBay, winner of the 2020 Gold Alexander Hamilton Award in the category Best Practices in Restricted/Emerging Markets!

For more than two decades, the digital marketplaces of eBay Inc. have brought together buyers and sellers around the world. The company’s Korean platform is a top brand in Korea and one of the top five e-commerce marketplaces in the world by sales volume. That explains why exposure to the Korean won presents a significant foreign exchange (FX) risk for eBay globally.

“Revenue and income derived from our Korean operations are denominated in Korean won,” says Shan Anwar, director of investments and payment integration for eBay Inc. “Depending on where FX rates are, Korea is usually in the top five markets for us in terms of currency risk.”

eBay won an Alexander Hamilton Award several years ago for its innovative approach to mitigating exposures of the dollar-functional parent company to European subsidiaries’ FX risk. If, for example, a euro-functional sub is carrying exposure to the British pound (GBP), the subsidiary mitigates its own risk by executing a standard hedge that sells pounds and buys euros. Then a euro-based eBay entity buys a security that delivers an equivalent amount in dollars at the same time the euro-pound forward expires. The solution mitigates FX risk and allows for hedge accounting at every level of the company.

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Meg Waters

Meg Waters

Meg Waters is the editor in chief of Treasury & Risk. She is the former editor in chief of BPM Magazine and the former managing editor of Business Finance.

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