Currency volatility can expose weaknesses in a fund’s operating model long before a trade reaches the market. Ahead of SuperReturn CFO/COO, Eric Huttman, CEO of MillTech, explains why manual FX processes are becoming harder to defend, how automation can reduce operational pressure and which decisions should remain firmly with finance leaders.

Why does FX place so much operational pressure on private markets firms, and how can they reduce it?

MillTech was founded around a simple observation: for most fund managers and corporates, foreign exchange is necessary, but it isn’t their core business. Yet managing it can consume a disproportionate amount of time and resources and getting it wrong can be costly.

Much of the operational pressure comes from fragmented banking relationships, opaque pricing and a surprising amount of manual work. Technology and infrastructure can reduce this burden by connecting FX workflows, from calculating exposures and sizing required hedges to price discovery, execution, settlement, and reporting.

Bringing these processes together can help firms manage FX transactions and hedging with greater transparency and operational efficiency. Ultimately, FX should be a well-governed risk management function running quietly in the background, rather than something that repeatedly drags senior finance and operations teams into the weeds.

Why should FX risk be higher on the agenda for private markets CFOs and COOs today?

FX risk has moved from background noise to a board- or partner-level discussion topic. Currency markets are becoming more volatile because of geopolitics, tariffs, central bank decisions and sudden changes in economic policy. This makes FX exposures harder to forecast and potentially more damaging when markets move quickly, especially if firms don’t have the infrastructure to adapt.

For private markets funds, the situation is further complicated because investments are often international and long-dated, and capital calls, distributions, fees and portfolio-company cash flows can create exposures across multiple currencies and time horizons.

Many firms assume that currency movements will eventually offset each other over time, but this can leave funds exposed when markets move abruptly. MillTech’s 2026 North America Fund Manager FX Report found that 97% of respondents reported losses on unhedged FX exposure due to geopolitical tensions.

Hedging FX risk can help protect funds against adverse currency movements, providing greater certainty over future cash flows and mitigating potential losses. You hope you don’t need all the protection you buy, but when markets turn abruptly, having a disciplined framework becomes invaluable.

You hope you don’t need all the protection you buy, but when markets turn abruptly, having a disciplined framework becomes invaluable.
Eric Huttman, CEO, MillTech

Where do traditional FX operating models fall short?

Sophisticated investment firms can still rely on outdated and highly manual FX operations. Emails, spreadsheets, phone calls and manual data entry remain common. MillTech’s research found that, in 2026, 36% of North American fund managers still instruct FX transactions by email, while 31% still use phones. This causes significant strain, as every manual hand-off slows teams down and creates opportunities for error or poor visibility.

Much of that effort goes into calculating exposures and determining the required hedging trades, which is separate from executing those trades. Netting exposures by currency, fund and share class, choosing tenors and rolling positions as value dates move are usually spreadsheet-based tasks. A wrong calculation can therefore result in a wrong hedge before it ever reaches the market.

A lack of pricing transparency is another weakness. Firms may rely on a limited number of counterparties or may not systematically compare pricing. Relationships with counterparty banks are also often maintained manually, leaving firms without visibility over competitive market-wide pricing and making it difficult to establish whether they are achieving best execution.

None of these problems is particularly glamorous, but collectively they create cost, consume resources and make FX harder to govern precisely when markets are moving fastest.

None of these problems is particularly glamorous, but collectively they create cost, consume resources and make FX harder to govern precisely when markets are moving fastest.
Eric Huttman, CEO, MillTech

Hedging itself can be expensive and operationally complex. How can private markets firms protect returns without creating another layer of cost and friction?

This is the central tension of FX hedging. Protection has a price, but leaving FX risk unprotected can be even more costly.

MillTech’s research found that 96% of North American fund managers reported increased hedging costs over the previous year, with an average increase of 57%. Against that backdrop, simply adding more people, counterparties and processes can be difficult to justify. The answer is not necessarily to build a bigger FX team, but to determine what requires internal judgement and what can be automated or supported externally.

For some firms, outsourcing parts of the process can remove much of the operational burden. Whether firms adopt an in-house, outsourced or hybrid model, automating exposure calculation, price discovery, execution, settlement and reporting can free internal teams to focus on the decisions that matter most, such as which risks to hedge, how much to hedge and within what parameters.

One of the largest potential efficiency gains lies in the exposure calculation itself. Data can be taken directly from a firm’s systems and assessed against its hedging rules to determine what to trade and at what tenor, rather than rebuilding the calculation in a spreadsheet every cycle across asset, share-class and balance-sheet hedging.

The goal is institutional-quality risk management without building an institution-sized FX department.

Protection has a price, but leaving FX risk unprotected can be even more costly
Eric Huttman, CEO, MillTech

How should private markets CFOs and COOs think about FX within the wider fund operating model?

FX shouldn’t sit in a silo, as it’s inherently connected to a fund’s liquidity, portfolio valuations, capital calls, distributions and ultimately investor returns. A stronger operating model is therefore one where currency exposures are visible alongside the fund’s wider cash and risk picture.

This becomes particularly important as private markets businesses scale. Adding funds, jurisdictions, currencies and counterparties can compound operational complexity very quickly if every new exposure brings another spreadsheet, banking relationship or manual workflow.

Technology and automation can help break the trade-off between growth and complexity by taking repetitive processes such as exposure calculation, price discovery, execution and reporting away from internal teams.

The important distinction is between automating judgement and automating process. CFOs should remain firmly in control of risk appetite and hedging policy, while technology should make the policy easier to execute and oversee, while making the underlying process faster. The CFO sets the hedge ratio, tolerance bands and permitted tenors; the calculation engine can then work from live exposure data and leave a record of how it reached the resulting trades, improving both efficiency and oversight.

The important distinction is between automating judgement and automating process.
Eric Huttman, CEO, MillTech

What does the future of FX management look like for private markets?

I think we’re moving from fragmented FX management towards more connected, intelligent infrastructure.

For years, the industry has focused heavily on optimising FX hedging and the transactions themselves. The opportunity now is to connect everything surrounding those transactions: identifying exposures, modelling potential outcomes, comparing counterparties, executing, settling and reporting, all through one connected workflow.

AI will have an increasing role to play, particularly in risk identification, scenario analysis and process automation. However, the most effective model will involve technology doing the heavy lifting while people set the rules. Striking this balance is crucial because volatility isn’t becoming more predictable. If anything, geopolitical and policy shocks are making currencies less forgiving of slow, manual processes.

Private markets firms spend enormous amounts of time building sophisticated investment and risk frameworks. FX should meet the same standard. The future lies in building an operating model that can adapt to currency fluctuations, rather than predict them.

The future lies in building an operating model that can adapt to currency fluctuations, rather than predict them.
Eric Huttman, CEO, MillTech

Questions around risk governance, operational scale and the effective use of technology will be central to the conversation at SuperReturn CFO/COO, taking place from 5–7 October 2026 at Hotel Okura, Amsterdam.

Please refer to MillTech’s Research Disclosure Page for more information about the data referenced in this article.