Flack Metal Bank (FMB) offers two types of DBSTs, a short-form or Entry product and a long-form or Pro product. Both allow metals buyers to convert a fixed-price arrangement into a floating-price arrangement and vice versa. And neither requires buyers to undertake hedge accounting, keeping the process as seamless as creating a PO.
DIRECTED BUY STRUCTURED TRANSACTIONS (DBST)
Previously, buyers had to purchase physical inventory from FGM to take advantage of the most sophisticated ferrous hedging deck in the industry. With the creation of Flack Metal Bank and Directed Buy Structured Transactions, buyers can now separate their metals supply from their metals price.
Powered by the risk team at Flack Metal Bank (FMB), Directed Buy Structured Transactions (DBSTs) allow OEMs who buy mill direct, or who buy from a service center, or who assign directed buys to Service Centers to take advantage of pricing on the forward curve for flat rolled products without disrupting their existing supply relationships. Service centers who prefer not to undertake the operational and administrative burden of hedging can also rely on DBSTs. DBSTs are essentially swaps of floating contracts for fixed contracts and vice versa.
SHORT-FORM OR ENTRY
Best for buyers who are comfortable with simple hedging strategy, who don’t want to worry about margin calls, and who only want to convert pricing once.
LONG-FORM OR PRO
Best for buyers who are comfortable with advanced hedging concepts, who have ability to forward margin call payments if required, and who want the ability to modify positions during the agreement.