Question 1

What is opportunity cost in FX hedging?

Accepted Answer

Imagine selling goods for €1M at a rate of 4.25 PLN. You lock in the rate with a forward. A month later EUR/PLN rises to 4.40. Did you lose? No — you earned exactly what you planned. Opportunity cost is not a loss — it is the price of certainty.

Question 2

Why should I hedge at the time of signing the contract?

Accepted Answer

Trade margin is calculated at the time of quoting — often 3–6 months before payment. If the exchange rate moves 5% in that time, and your margin is 8%, you lose more than half your profit. Protecting your margin means locking in the rate at the moment you know your selling price.

Question 3

Do you help with currency speculation?

Accepted Answer

Currency speculation is a bet on rate direction without a real transaction backing it. TreasuryStream never recommends a rate direction or encourages speculation. Our goal is eliminating risk — not trading one type for another.

Question 4

How do I reduce currency risk as an exporter?

Accepted Answer

TreasuryStream implements targeted hedging policies using forwards and options to lock in favorable rates and protect your profit margins from volatility.

Question 5

How do I reduce currency risk as an importer?

Accepted Answer

An importer pays in foreign currency and risks PLN depreciation. TreasuryStream protects importers by buying currency forwards at a pre-agreed rate, protecting the purchasing budget and margin.

Question 6

Do you recommend specific banks?

Accepted Answer

No. TreasuryStream is strictly independent. We do not recommend financial institutions; we act on your behalf to negotiate the best terms with your existing banking partners.

Question 7

What is a LEI code?

Accepted Answer

Legal Entity Identifier (LEI) is a 20-character unique identifier required for legal entities entering derivatives transactions (FX forwards, options, IRS). It is issued in Poland by KDPW or KIR, at a cost of approx. EUR 50–100/year. Without a LEI, a regulated bank will refuse to execute treasury transactions.

Question 8

Who needs a LEI code?

Accepted Answer

Any company entering treasury transactions (forwards, options, FX swaps) with a MiFID II-regulated bank is required to hold a LEI code under EMIR regulation. TreasuryStream assists clients in obtaining their LEI as part of the onboarding process.

Question 9

What is a SWIFT/BIC code?

Accepted Answer

An 8 or 11-character bank identifier required for international and SEPA transfers. Format: 4-char bank code + 2-char country + 2-char location + optional 3-char branch. Without a correct SWIFT code, a currency transfer will not reach the recipient or will be returned with correspondent bank charges deducted.

Question 10

What are treasury transaction limits?

Accepted Answer

A treasury limit is trade credit extended by a bank that allows a company to enter forward transactions (e.g. FX forward) without posting an upfront deposit. The bank assesses the company's creditworthiness and grants a maximum exposure limit — typically expressed as a PLN equivalent or currency notional.

Question 11

How do I obtain a treasury limit?

Accepted Answer

Submit an application to the bank's Treasury Department and provide: financial statements for the last 2 years, cash flow projections, and a description of hedging needs. TreasuryStream guides clients through the entire process — preparing documentation and negotiating limit terms (deposit rate, margin call levels, collateral).

Question 12

What is a currency hedging policy?

Accepted Answer

An internal document governing the rules for managing currency risk within a company: permitted hedging instruments, time horizon, percentage of exposure to be hedged, authorised signatories, and loss limits. Required for hedge accounting under IFRS 9.

Question 13

Does my company need a hedging policy?

Accepted Answer

If you regularly invoice or import goods in foreign currencies (EUR, USD, GBP, CZK, or others) — yes, a hedging policy is recommended. It prevents ad-hoc currency decisions and is a required document during financial audits and for hedge accounting. TreasuryStream develops tailored hedging policies.

Question 14

What is MiFID II and why does it affect my company?

Accepted Answer

An EU directive regulating the financial instruments market. Every entity entering into treasury transactions (forwards, options) must be classified by the bank.

Question 15

What is the difference between a retail and a professional client?

Accepted Answer

A retail client has higher legal protection: the bank is obliged to assess suitability, provide full documentation, and issue risk warnings. A professional client has less protection but greater trading freedom. Most Polish SMEs are retail clients.

Question 16

How does the bank classify my company?

Accepted Answer

The bank assesses the company's knowledge, experience, and size. Small and medium enterprises without a treasury department are typically classified as retail.

Question 17

Can I change my classification?

Accepted Answer

Yes, you can apply for reclassification to professional, but this involves waiving some protections. TreasuryStream advises whether such a change is beneficial for a given client.

Question 18

What does this mean in practice?

Accepted Answer

The bank must provide a KID (Key Information Document) before each derivative transaction, conduct an appropriateness test, and issue risk warnings.

Question 19

What is the DXY dollar index?

Accepted Answer

The DXY (US Dollar Index) measures the value of the US dollar against a basket of six major currencies: EUR (57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), and CHF (3.6%). A rising DXY signals a strengthening dollar — importers paying in USD face higher costs, while exporters earn more PLN on USD-denominated revenues. DXY is a global barometer of risk appetite and Fed policy.

Question 20

What is KNF and what role does it play?

Accepted Answer

The Polish Financial Supervision Authority (KNF) supervises financial service providers in Poland, including banks, brokerage houses, and investment firms. The register of supervised entities is available at knf.gov.pl. Before choosing a treasury or cash management service provider, verify their status in the KNF register — unregulated entities are not subject to investor protection or supervisory oversight.

Understanding FX Risk

FX Risk Basics

Working with TreasuryStream

LEI Code

International Settlements

Treasury Limits

Hedging Policy

MiFID II Regulations and Classification

Market Indicators

Regulation

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