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Hardwiring Philantropy into FX Trading

Just small rounding adjustments to the trillions of dollars traded in foreign exchange markets every day could change many lives. That is the principle behind Societe Generale new ‘Hedge to Pledge’ charitable initiative, intended to weave philanthropic giving into the fabric of global FX trading.

 

For the first time, companies and financial institutions trading FX will be offered the opportunity to round up transactions, adding just a few basis points to their trading spreads. Although the cost is marginal, the volumes trading on global FX markets every day are so high that there is potential to raise considerable sums.

From March 2019, ‘Hedge-to-Pledge’ brings the concept of rounding up that has been successful in e-commerce to the financial markets. To give just one example from retail e-commerce, for the five years since 2013 Amazon has pledged to pay 0.5% of the purchase price of its 10 million AmazonSmile products to a charity of the customer’s choice. Again, just a small rounding error across a high number of transactions can make a big difference.

“I hope that a lot of clients will welcome the initiative and recognise that the small digits we are talking about change in FX markets in a fraction of a second,” explains Antoine Jacquemin, Deputy Head of Corporate Sales for Western Europe, who is driving this innovation within the bank. “It changes very little to the underlying transaction, but if we manage to capture this value it can make a difference to the communities that need it.”

When donating, Societe Generale clients can choose from 29 NGOs and social enterprises based in 11 countries. Selected by EPIC Foundation, SG CIB’s partner for this initiative, they operate in fields such as youth education, mental health and economic empowerment. Under the leadership of serial entrepreneur and philanthropist Alexandre Mars, EPIC deploys rigorous criteria to screen organisations with strong social impact, as well as effective management and governance.

Societe Generale has engineered a simple interface on trading screens that collects clients’ post-transaction information and calculates the rounding total. Rounding per transaction may vary from as little as €10 to as much as €100 or more. The customer can define the threshold level at which donations will be triggered, but there is a default level of €10,000. Clients can then choose which EPIC charities to donate to.

The bank pledges to match each initial donation, as long as it falls within the SG Foundation’s sponsorship policy in areas such as professional integration or integration through sport and culture.

What will success look like and how much money will be raised? “It’s difficult to know,” says Jacquemin. “I can only say that it will never be enough. For me what’s more important is the message and the movement, and the fact that what I would like to achieve is to change how the financing community looks at these topics.” 

Hardwiring philanthropy into FX Trading