Internal Hedging definition
Internal Hedging means the practice by which some directors and members of staff at Subsidiaries A and B decided personally to act as a hedge for (and thereby stand behind) the financial exposure generated by selected client positions, thereby underwriting losses and accruing profits arising from those positions in their personal capacity. Such Internal Hedging was an alternative to (a) leaving the position unhedged, such that the financial exposure was retained by the provider of the position to the client, eg Subsidiary A or Subsidiary B, or (b) hedging the risk by taking out CFDs in the same asset with third party brokers, such that the financial exposure was transferred to a third party;