Auto-Hedging

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Auto-hedging is the automatic computer program designed to reduce asset or capital exposure. It covers the coverage of a long or short position, resulting from a market making or arbitrage activity in FX, Equities, fixed income or derivatives. It can be done on a one-to-one, i.e. when a trade affects a long/short position to bring it to the neutral position, or as a aggregate level calculating the overall exposure.