Create a Hedge Position and Allocation for a Despatch Order QP Override

This activity creates a hedge position for a physical commodity and allocates the despatch order quotation pricing (QP) line override to the hedge position.

A QP line override can be hedged for despatch orders associated with contracts with either product pricing or analyte pricing. This is because the quantity and price are specific to the individual despatch order.

In order to be hedged, the despatch order QP line override must:

  • Be for a despatch order that is not a child despatch order
  • Be for a despatch order that does not have Ignore For Hedging checked
  • Be inherited from either a contract-level set of contract terms, or from an override set of contract terms for a quota that does not have Hedging Required checked
  • Have the Weighting Type of the QP header set to Quantity
  • Have the Weighting Value specified

Security Note: You need the Allow the user to maintain hedge actions security right in the Accounting user group security rights group for this activity.

Activity Steps

  1. Open the Despatch Order.
  2. Select the Contract Term Overrides tab.
  3. Check Override Quotation Pricing.

    An Override node with a Quotation Pricing node displays.

  4. Select the Quotation Pricing node.

    The quotation pricing details inherited from the contract display.

  5. Perform one of the following steps:
    1. To create a futures contract or an options contract, right-click the quotation pricing line in the Quotation Pricing table and select Hedge » Hedge Action from the menu.
    2. To create a spread contract or a swaps contract, right-click the quotation pricing line in the Quotation Pricing table and select Hedge » Related Actions from the menu.

    The menu displays applicable market commodities, each with its associated market.

  6. Select the market commodity for which to create the hedge position.

    The New Hedge Action screen displays.

    Note: The Contract Type, Option Type (if applicable) and Transaction Type are as specified for the market commodity.

    The Owner Organisation and District are inherited from the despatch order's contract.

    The Number Of Contracts defaults to a value that is sufficient for the Quantity of the hedge position to be greater than the Allocated Quantity from the despatch order's QP line. Keeping this default means that the QP line is overhedged.

  7. As applicable for the hedge position's contract type, see the following activities for further steps:

    Note: Some steps can only be completed on the Hedge Actions tab of the Hedging Explorer after searching for the hedge position. Additional despatch orders or quotas can be allocated to the hedge position if there is sufficient unallocated quantity in the hedge position.