A large diversified financial services firm founded on the West Coast in 2009, originates commercial real estate loans and sells them as whole loans to investors.

The company was looking to manage the interest rate risk of its rapidly growing new loan pipeline.


Effective Rate Risk Management in Real Estate Finance


  • The company needed to manage rate risk of a large set of fixed rate loans between origination through to sale to investors.

  • The company needed to establish relationships with swap dealers, a clearing exchange and a Futures Commissions Merchant (“FCM”) to begin its pipeline hedging program.

  • It also needed a cost-effective way to manage these transactions and be able to dynamically track the quickly changing portfolio as loans were originated and/or sold.

  • The company needed a partner that understood the complexities of Dodd-Frank while also being able to provide timely advice on its hedging strategy to offset the exposure in its loan portfolio and meet the demands of loan warehouse financing terms.


  • The company signed on with Derivative Path, Inc. in 2014.

  • DPI helped the company rapidly establish Swap Dealer and FCM relationships, as well as get set up on the ISDA Protocol and Markit systems, to facilitate clearing and hedging activities.

  • On an ongoing basis, DPI reviews and assists with the most efficient execution of all trades to manage the rate exposure of the quickly evolving portfolio.

  • The firm has full access to its derivatives portfolio information through DerivativeEDGE. The firm greatly values having a trading platform that is available at all times with pricing information updated with real time market data.

  • All of these tasks are executed efficiently, while the company has the confidence that with DPI’s assistance, all of this hedging activity is conducted in compliance with Dodd-Frank requirements.