how do banks manage fx cash balance on the trading desk level


New Member
Hi , i cant find any litrature on this issue of identifying the cash balance on a bank trading desks. .
Banks hold nostro accounts for fx transactions with correspondent banks , each major currency will have a nostro account , so the bank knows at any given time the account balance by managing a mirror account . these nostro accounts are managed at bank level.
my question is , how do banks or treasury manage the fx balance on a level of the different trading desks ? do they manage a sub ledger account four each desk / curency ?

Ken Abbott

Managing Director
Banks maintain a constant watch on all net FX balances. They are generally divided into "hedge" and "do not hedge" categories. The "hedge"sums are managed by the bank treasury department at the aggregate level. The "do not hedge" accounts reflect actual risk taking (i.e., the bank would not want to automatically hedge an EUR position taken by an FX trader. As you might well imagine, this can be operationally complex and baks ave been known occasionally to lose millions on unhedged amounts that were supposed to be flattened.