Going forward KLF offers companies insurance cover for turbulent market phases by giving them irrevocable access to liquid assets.
It aims to give businesses control of their financing costs again, and therefore provide planning security during both stable and unstable market phases.
Difficult to assess risks associated with increased reserves of liquid assets due to potential special taxation and changes to interest rates or currency exchange rates, etc. will be eliminated as far as possible. Expensive hedging strategies are no longer required.
Periodic commitment fees and financing costs for the insurance will also be significantly lower than the only real present alternatives, pre-funded liquid assets or bonds eligible for refinancing at central banks.
There will be expected ongoing cost savings of around 65% in the beginning, rising to 90% over the medium to long term!
The main advantages for participating companies are as follows:
KLF insurance addresses strategic business problems at different levels and is therefore much more than just a pure treasury product.
Companies are therefore being forced to hold adequate collateral in reserve in the form of liquid assets, and continually refinance these so that they are able to deal promptly with any variation margin requirements in times of high volatility or substantial changes to the reference prices. Bank guarantees will no longer be accepted in the future.
Otherwise companies run the risk of being forced to liquidate their hedging positions at the very time they are needed most.
KLF insurance is not designed for financing ongoing business and investment activities or everyday trading in derivatives.