WisdomTree Foreign Exchange Limited
Registered No: 103518
Annual Report and Audited Financial Statements for the
Year ended 31 December 2024
WisdomTree Foreign Exchange Limited
Contents
Management and Administration 1
Directors' Report 2 - 10
Statement of Directors' Responsibilities 11
Independent Auditor's Report 12 - 19
Statement of Profit or Loss and Other Comprehensive Income 20
Statement of Financial Position 21
Statement of Cash Flows 22
Statement of Changes in Equity 23
Notes to the Financial Statements 24 - 43
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WisdomTree Foreign Exchange Limited
Management and Administration
Directors Manager
Vinod Rajput (Appointed on 09 August 2024)
(Up to 14 June 2024)
Olivia Vuillemin (Appointed on 12 July 2024) WisdomTree Management Jersey Limited
Peter Ziemba Ordnance House
Bryan Governey 31 Pier Road
David Middleton (Appointed on 12 July 2024 and Resigned on 09 August 2024) St Helier
Christopher Foulds (Resigned on 12 July 2024) Jersey, JE4 8PW
Steven Ross (Resigned on 12 July 2024)
(As from 14 June 2024)
Registered Office
WisdomTree Management Jersey Limited
(Up to 14 June 2024)
IFC 5
Ordnance House St Helier
31 Pier Road Jersey, JEI 1ST
St Helier
Jersey, JE4 8PW
(As from 14 June 2024)
IFC 5
St Helier
Jersey, JEI 1ST
Administrator
(Up to 14 June 2024)
R&H Fund Services (Jersey) Limited
Ordnance House
PO Box 83
31 Pier Road
St Helier
Jersey, JE4 8PW
(As from 14 June 2024)
Apex Financial Services (Alternative Funds) Limited
IFC5
St Helier
Jersey, JEI 1ST
Company Secretary
(Up to 14 June 2024)
R&H Fund Services (Jersey) Limited
Ordnance House
31 Pier Road
St Helier
Jersey, JE4 8PW
(As from 14 June 2024)
Apex Financial Services (Secretaries) Limited
IFC5
St Helier
Jersey, JEI 1ST
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Collateral Custodian
The Bank of New York Mellon
One Canada Square, London E14 5AL
Trustee
The Law Debenture Trust Corporation plc
8th Floor
100 Bishopsgate
London, EC2N 4AG
United Kingdom
Currency Transaction Counterparty
Morgan Stanley & Co. International plc
25 Cabot Square
Canary Wharf
London, E14 4QA
United Kingdom
Jersey Legal Advisers
Mourant Ozannes (Jersey) LLP
22 Grenville Street
St Helier
Jersey, JE4 8PX
Jersey, JE1 1ES
St Helier
13 Castle Street
Computershare Investor Services (Jersey) Limited
Registrar
Auditor
Ernst & Young LLP
Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey
GY1 4AF
WisdomTree Foreign Exchange Limited
Directors’ Report
Directors
Vinod Rajput (Appointed on 09 August 2024)
Olivia Vuillemin (Appointed on 12 July 2024)
Peter Ziemba
Bryan Governey
Christopher Foulds (Resigned on 12 July 2024)
Steven Ross (Resigned on 12 July 2024)
David Middleton (Appointed on 12 July 2024)
(Resigned on 09 August 2024)
Directors’ Interests
Principal Activities
The Company earns a management fee based upon the contractual value of Currency Securities in issue, expressed as an annual percentage,
calculated on a daily basis and reflected in the net asset value (“NAV”) of the securities on a daily basis, and paid monthly in arrears.
The Company has entered into a service agreement with WisdomTree Management Jersey Limited (“ManJer” or the “Manager”), whereby ManJer
is responsible for supplying or procuring the supply of all management and administration services required by the Company (including
marketing) as well as the payment of costs relating to the listing and issue of Currency Securities.
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The directors of WisdomTree Foreign Exchange Limited (“FXL” or the “Company”) submit herewith the annual report and financial statements
of the Company for the year ended 31 December 2024.
The names and particulars of the directors of the Company during and since the end of the financial year are:
No director has an interest in the Shares of the Company as at the date of this report.
The Company’s principal activity is the issue and listing of collateralised currency securities (“Currency Securities”). Currency Securities are
undated secured limited recourse financial instruments designed to provide investors with long or short exposure to the daily foreign exchange
performance of developed or emerging market currencies or baskets of developed market currencies measured against the US Dollar (“USD”), the
Euro (“EUR”) or the British Pound (“GBP”), less applicable fees. This is achieved by the Currency Securities tracking published currency
indices. The price of the Currency Securities is calculated on a daily basis to reflect the change in the relevant currency index and takes into
account the payment of a management fee and a daily spread. The Currency Securities are denominated in USD, EUR or GBP.
Currency Securities are backed by unfunded currency transactions (“Currency Transactions”) with terms corresponding to the terms of Currency
Securities. Each time Currency Securities are issued or redeemed, corresponding Currency Transactions between the Company and the Currency
Transaction Counterparty are created or closed by the Company. Cash received by the Company linked to Currency Transactions entered into
with a Currency Transaction Counterparty is used to enter into a USD, GBP or EUR denominated daily repurchase transaction with the Currency
Transaction Counterparty in exchange for eligible collateral on the terms described in the Company’s Prospectus (collectively the “Underlying
Assets”). The Company has entered into a Collateral Administration Master Agreement with the Bank of New York Mellon as the collateral
custodian. On each day the Currency Transaction Counterparty is required to pay back the USD, GBP and EUR amounts in exchange for the
eligible collateral held the previous day, which allows the Company to enter into new daily repurchase transactions in exchange for eligible
collateral required on that day, however in accordance with the terms of a supplemental agreement to the Collateral Administration Master
Agreement those new daily repurchase transactions can be paired with maturing deals on the previous daily repurchase transactions meaning that
the net amounts (in each of USD, GBP and EUR) are transferred each day. This daily process ensures that eligible collateral (at fair market value)
received from the Currency Transaction Counterparty represents at least 100% of the value of the cash paid for the daily repurchase transaction
entered into. A daily payment amount will also be calculated in respect of each Currency Transaction on each day to reflect the movement in the
relevant currency index and this amount will also be payable by either the Company or the Currency Transaction Counterparty. No trading or
management of futures contracts is required by the Company.
The Company has entered into a facility agreement with Morgan Stanley & Co. International plc (“Morgan Stanley”), currently the only Currency
Transaction Counterparty, enabling the Company to create and cancel Currency Transactions on an ongoing basis.
WisdomTree Foreign Exchange Limited
Directors’ Report (Continued)
Principal Activities (continued)
Review of Operation
USD Currency Securities 14 - 2 -
EUR Currency Securities - 26 11 6
GBP Currency Securities 12 - - -
Total Currency Securities 26 26 13 6
The Company’s exposure to risks is disclosed in note 12 to the financial statements.
The Company is entitled to a management fee which is calculated on a daily basis:
•
3* and 5* Leveraged Currency Securities have a management fee rate of 0.98% per annum;
•
CNY Currency Securities have a management fee rate of 0.59% per annum; and
•
All remaining classes of Currency Securities have a management fee rate of 0.39% per annum.
The Company recognises its financial assets (Currency Transactions) and financial liabilities (Currency Securities) at fair value in the Statement
of Financial Position. The gain or loss on Currency Securities and the Currency Transactions is recognised through profit or loss in line with the
Company’s accounting policy. This is presented in more detail in notes 7 and 8 to these financial statements.
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The Company is also entitled to apply creation and redemption fees on the issue and redemption of Currency Securities. During the year, the
Company generated income from creation and redemption fees, management fees and bank interest as follows:
The Company has entered into contractual obligations to issue and redeem Currency Securities at set prices on each trading day. These prices are
based on agreed formulae published in the Prospectus, and are equal to the published NAV of each class of Currency Security.
IFRS 13 requires the Company to identify the principal market and to utilise the available price within that principal market. The directors
consider the stock exchanges where the Currency Securities are listed to be the principal market and as a result the fair value of the Currency
Securities is the on-exchange price as quoted on the stock exchange demonstrating active trading with the highest trading volume on each day
that the price is obtained. As a result of the difference in valuation between Currency Transactions and Currency Securities there is a mis-match
between the values recognised and the results of the Company reflect a gain or loss on the difference between the NAV of the Currency
Transactions and the price of Currency Securities.
London
Stock
Exchange
Borsa
Italiana
Deutsche
Börse
NYSE- Euronext Paris
In return for these services, the Company has an obligation to remunerate ManJer with an amount equal to the aggregate of the management fee
and the creation and redemption fees, less any expenses directly incurred (the “ManJer Fee”). ManJer receives creation and redemption fees
directly from the holders of Currency Securities who have entered into an authorised participant agreement with the Company (“Authorised
Participants”), and accordingly, there are no related cash flows through the Company in respect of creation and redemption fees.
The most recent Prospectus was issued on 04 November 2024. As at 31 December 2024 the Company had the following number of classes of
Currency Securities in issue and with listings, in aggregate, admitted to trading on the following exchanges:
As at 31 December 2024, the fair value of assets under management amounted to USD 195.9 million (2023: USD 280.7 million).
WisdomTree Foreign Exchange Limited
Directors’ Report (Continued)
Review of Operations (continued)
2024 2023
USD USD
Creation and Redemption Fees
-
-
Management Fees
1,590,272
2,051,265
Bank Interest
10,440
13,658
Total Fee Income
1,600,712
2,064,922
Non-GAAP Performance Measures
Future Developments
Going Concern
Corporate Social Responsibility
As the difference in the valuation of Currency Transactions (held to support the Currency Securities) and Currency Securities would be reversed
on a subsequent redemption of the Currency Securities and closure of the corresponding Currency Transactions (as described further in note 8),
the Company presents an adjusted Statement of Profit or Loss and Other Comprehensive Income and an adjusted Statement of Changes in Equity
in note 15 of the financial statements.
The Board are not aware of any other developments that might have a significant effect on the operations of the Company in subsequent financial
periods not already disclosed in this report or the attached financial statements.
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The directors continue to monitor and assess the impact of geopolitical factors on the assets under management of the Company and will take any
potential actions needed or as required under the terms of the prospectus, as facts and circumstances are subject to change and may be specific to
investments and jurisdictions. The nature of the Company’s business dictates that the outstanding Currency Securities may be redeemed at any
time by Authorised Participants and in certain circumstances by individual holders and also, in certain circumstances, may be compulsorily
redeemed by the Company. As the redemption of Currency Securities will always coincide with the closing of an equal amount of Currency
Transactions, liquidity risk is mitigated through this process which is considered to minimize exposure to liquidity risk. All other expenses of the
Company are met by ManJer. The directors closely monitor the financial position and performance of ManJer, its assets under management, and
therefore its related revenue streams, in respect of fulfilling the obligations under the services agreement. The net reported position on balance
sheet, including in instances where a deficit is reported, is not considered to impact the going concern position of the Company as this position
results solely due to the unrealised gains or losses on Currency Transactions and Currency Securities due to the accounting measurement basis
applied in accordance with IFRS. As Currency Transactions are held to support Currency Securities, any deficit or surplus reported on unrealised
positions would be reversed on a subsequent redemption of the Currency Securities and the related transfer of Currency Transactions. A reported
deficit is not considered indicative of any issues relating to solvency of the Company and the directors are satisfied that any obligations arising in
respect of the Currency Securities can be managed in accordance with the terms of the applicable Prospectus. The directors consider the
operations of the Company to be ongoing, with a reasonable expectation that the Company has adequate resources to continue in operational
existence until 30 April 2026, and accordingly these financial statements have been prepared on the going concern basis.
Under the terms of the service agreement with ManJer, the Company accrued expenses equal to the management fees and the creation and
redemptions fees, which, after taking into account other operating income and expenses, resulted in a result before fair value movements for the
year of USD Nil (2023: USD Nil).
Sustainability and corporate responsibility are embedded throughout the business of the of WisdomTree, Inc and its subsidiaries (the
“WisdomTree group”) as Wisdomtree Group believes this benefits shareholders and employees of the WisdomTree group, investors in
WisdomTree’s products as well as wider society.
WisdomTree Foreign Exchange Limited
Directors’ Report (Continued)
Corporate Social Responsibility (continued)
Dividends
Directors’ Remuneration
Employees
Auditor
This conclusion is based on the fact that assets are reported at fair value under IFRS, and as set out in note 13 are categorised as level 2 due to the
use of observable, verifiable inputs and third party information sources. The liabilities are valued utilising listed market prices at the period end.
These observable inputs and market prices will reflect wider market sentiment, which inherently includes market perspectives relating to the
impact of climate change.
The Board recognises that government and societal responses to climate change risks are still developing and the future impact cannot be
predicted. Future valuations of assets and liabilities may therefore differ as the market responds to these changing impacts or assesses the impact
of current requirements differently.
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There were no dividends declared or paid in the year (2023: USD Nil). It is the Company’s policy that dividends will only be declared when the
directors are of the opinion that there are sufficient distributable reserves.
No director has a service contract with the Company. The directors of the Company who are employees within the WisdomTree, Inc. group do not
receive separate remuneration in their capacity as directors of the Company. The directors of the Company who are employees of Apex Financial
Services (Alternative Funds) Limited (“Apex” or the “Administrator”) and R&H Fund Services (Jersey) Limited do not receive separate
remuneration in their capacity as directors of the Company, however Apex receives a fee from ManJer which includes services in respect of the
Company, including for the provision of directors who are employees of Apex.
The Company does not have any employees. It is the Company’s policy to use the services of specialist subcontractors or consultants as far as
possible.
Environmental, Social and Governance (“ESG”) investing is guided at the WisdomTree group level by an ESG Steering Committee, which
includes senior leaders from across the WisdomTree group business, and which includes several sub-committees focused on particular ESG
considerations, such as improving data and transparency into the ESG attributes of WisdomTree’s products. Particular ESG considerations
relevant to the Company’s products are overseen by the directors, leveraging the work undertaken by the ESG Steering Committee. More
information on WisdomTree’s corporate social responsibility strategy can be found on the WisdomTree website (https://www.wisdomtree.eu/en-
gb/wisdomtree-corporate-responsibility).
The Board acknowledges that climate change and its impact on the global economy is of increasing interest and focus for stakeholders and that,
where relevant, stakeholders will seek information from companies regarding how climate change is expected to impact the operations of the
business and how climate change risk has been considered in the context of reported results.
In acknowledging the above, the Board has considered the Company’s exposure to climate change and determined that due to the nature of the
Company and its operations there are no directly observed impacts of climate change on the business. As a result, the Board concluded that there
is no basis on which to provide extended information of analysis relating to climate change, including as part of the basis of accounting or
individual accounting policies adopted by the Company.
In the above determination, the Board has concluded specifically that climate change, including physical and transition risks, does not have a
material impact on the recognition and separate measurement considerations of the assets and liabilities in these financial statements as at 31
December 2024.
The Independent Auditor is Ernst & Young LLP. A resolution to re-appoint Ernst & Young LLP will be proposed at the next Board meeting of the
director on behalf of the sole shareholder.
WisdomTree Foreign Exchange Limited
Directors’ Report (Continued)
Principal Risks and Uncertainties
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The Currency Securities provides investors with long or short exposure to the daily foreign exchange performance of developed and emerging
market currencies measured against USD, EUR or GBP. Movements in the value of the Underlying Assets, and thus the value of the Currency
Securities, may vary widely which could have an impact on the demand for the Currency Securities issued by the Company.
Any movements in value of those Underlying Assets backing the Currency Securities are wholly attributable to the holders of the Currency
Securities, therefore the Company has no residual exposure to movements in the value of the Underlying Assets. From a commercial perspective
the Company does not retain any net gains or losses or net risk exposures, as (with the exception of the impact of management fees) the gains or
losses on the liability represented by the Currency Securities are matched economically by corresponding losses or gains attributable to the
Underlying Assets backing the Currency Securities (see detail on page 3 regarding the accounting mis-match). Furthermore, the Company is
obligated to remunerate ManJer with the ManJer Fee, which results in the Company recognising a result before fair value movements of nil for
each period. As a result, the principal risks and uncertainties to which the Company is exposed has not materially changed during the year ended
31 December 2024.
There is an inherent risk from the point of view of investors as the values of currencies, and thus the value of the Currency Securities, may vary
widely due to, amongst other things, changing supply and demand for a particular currency, government and monetary policy or intervention,
interest rate levels and global or regional political, economic or financial events. The market price of Currency Securities is (and will remain) a
function of supply and demand amongst investors wishing to buy and sell Currency Securities and the bid or offer spread that the market makers
are willing to quote.
Movements in exchange rates can be so significant that they lead to the level of a currency index for any class falling to zero. Since leveraged
currency indices provide leveraged exposure to daily changes in foreign exchange rates calculated against a base value determined on the second
previous business day, it is possible that in certain highly volatile markets a leveraged currency index may fall to zero where the foreign exchange
rate moves by a large amount over the course of two trading days or even where a particular exchange rate moves by a very large amount over the
course of one day. In these circumstances the Currency Securities for that class may become subject to compulsory redemption at a zero price. In
such situations, the Currency Securities may be redeemed for no value and a security holder will receive no payment on that redemption.
WisdomTree Foreign Exchange Limited
Directors’ Report (Continued)
Principal Risks and Uncertainties (Continued)
Movement in
Securities NAV USD Securities NAV USD NAV
The contractual value (at NAV) of the Commodity Securities as at 31 December, and the movement over the period amounted to:
2024
2023
WisdomTree 3x Long EUR Short GBP
25,427
24.95
634,348
10,427
29.79
310,599
-16.25%
WisdomTree 3x Long USD Short GBP
22,694
88.48
2,008,026
27,846
83.62
2,328,621
5.82%
WisdomTree 3x Short EUR Long GBP
37,721
52.26
1,971,388
9,271
43.51
403,391
20.12%
1,662,337
-6.70%
WisdomTree Long CHF Short GBP
10,929
70.47
770,145
22,029
76.16
1,677,728
-7.47%
WisdomTree 3x Short USD Long GBP
164,011
9.98
1,637,365
155,311
10.70
529,399
-4.14%
WisdomTree Long JPY Short GBP
138,419
33.65
4,658,265
143,159
38.11
5,455,686
-11.69%
WisdomTree Long EUR Short GBP
7,032
52.41
368,572
9,682
54.68
1,918,537
3.85%
WisdomTree Short CHF Long GBP
1,882
42.13
79,288
1,682
37.77
63,524
11.54%
WisdomTree Long USD Short GBP
19,352
73.16
1,415,867
27,232
70.45
4,307,407
8.11%
WisdomTree Short JPY Long GBP
1,569
83.93
131,691
2,849
72.20
205,701
16.25%
WisdomTree Short EUR Long GBP
70,889
61.04
4,326,808
76,289
56.46
1,037,272
-0.43%
WisdomTree 3x Long EUR Short
USD
63,578
8.63
548,409
88,778
10.69
949,221
-19.31%
WisdomTree Short USD Long GBP
16,860
42.04
708,788
24,570
42.22
1,287,775
-3.29%
WisdomTree 3x Long JPY Short USD
1,613,233
2.24
3,612,039
888,983
3.64
3,236,679
-38.49%
WisdomTree 3x Long GBP Short USD
79,988
12.97
1,037,300
96,048
13.41
2,562,573
29.20%
WisdomTree 3x Short GBP Long USD
8,301
54.54
452,709
15,101
50.80
767,101
7.36%
WisdomTree 3x Short EUR Long
USD
14,768
103.02
1,521,457
32,138
79.74
683,245
55.19%
WisdomTree Long EUR Short USD
3,503
30.54
106,977
12,303
31.69
389,831
-3.63%
WisdomTree 3x Short JPY Long USD
1,386
311.31
431,480
3,406
200.60
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WisdomTree Foreign Exchange Limited
Directors’ Report (Continued)
Principal Risks and Uncertainties (Continued)
Movement in
Securities NAV USD Securities NAV USD NAV
2024
2023
WisdomTree Long GBP Short USD
65,299
37.05
2,419,340
66,434
36.17
2,403,009
2.43%
WisdomTree Long JPY Short USD
159,205
23.35
3,717,709
558,257
26.27
14,666,202
-11.11%
1,377,036
12.76%
WisdomTree Short GBP Long USD
18,780
62.49
1,173,614
21,680
58.93
1,277,531
6.05%
WisdomTree Short EUR Long USD
9,330
77.57
723,708
20,017
68.79
233,745
21.06%
WisdomTree 3x Long CHF Short EUR
6,341
63.99
405,764
5,991
75.54
452,587
-15.29%
WisdomTree Short JPY Long USD
3,015
98.77
297,795
2,865
81.59
781,033
13.54%
WisdomTree 3x Long JPY Short EUR
991,934
7.11
7,051,084
814,034
9.80
7,979,391
-27.47%
WisdomTree 3x Long GBP Short EUR
9,976
48.94
488,179
18,121
43.10
3,941,497
19.67%
WisdomTree 3x Short CHF Long EUR
100,954
11.07
1,117,538
102,954
10.68
1,099,713
3.65%
WisdomTree 3x Long USD Short
EUR
30,901
117.44
3,629,147
40,161
98.14
182,038
-21.57%
WisdomTree 3x Short JPY Long EUR
13,877
64.89
900,529
2,077
56.12
116,558
15.63%
WisdomTree 3x Short GBP Long EUR
17,749
16.42
291,355
8,699
20.93
70,817,685
-26.70%
WisdomTree Long AUD Short EUR
11,561
52.11
602,436
6,861
55.79
382,795
-6.60%
WisdomTree 3x Short USD Long
EUR
8,631,782
6.13
52,894,647
8,471,682
8.36
1,852,410
-7.47%
WisdomTree Long GBP Short EUR
93,861
55.41
5,200,712
137,861
54.39
7,498,672
1.87%
WisdomTree Long CHF Short EUR
27,951
63.85
1,784,744
26,841
69.01
52,361,787
-11.71%
WisdomTree Long NOK Short EUR
118,693
36.96
4,387,168
202,143
40.12
8,109,738
-7.87%
WisdomTree Long JPY Short EUR
394,714
31.30
12,354,067
1,477,184
35.45
6,848,129
-6.90%
WisdomTree Long USD Short EUR
63,041
63.47
4,001,077
69,941
61.12
4,274,821
3.84%
WisdomTree Long SEK Short EUR
121,888
40.36
4,919,175
157,958
43.35
97,723
-2.01%
WisdomTree Short CHF Long EUR
9,009
29.00
261,221
9,099
29.30
266,604
-1.04%
WisdomTree Short AUD Long EUR
895
34.88
31,220
2,745
35.60
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WisdomTree Foreign Exchange Limited
Directors’ Report (Continued)
Principal Risks and Uncertainties (Continued)
Movement in
Securities NAV USD Securities NAV USD NAV
194,351,614 278,693,826
The cash flows of the Company relate to:
•
the receipt and payment of amounts on the creation and redemption of Currency Securities;
•
•
2024
2023
WisdomTree Short GBP Long EUR
16,194
33.90
548,964
15,564
37.64
585,886
-9.94%
WisdomTree Short JPY Long EUR
1,134
55.68
63,140
1,934
53.96
104,359
3.19%
WisdomTree Short NOK Long EUR
733
49.27
36,112
533
49.72
26,503
-0.91%
79,172
-1.72%
WisdomTree Short USD Long EUR
1,518,906
29.45
44,730,660
1,317,406
33.39
43,986,859
-11.80%
WisdomTree Short SEK Long EUR
843
47.53
40,067
1,637
48.36
193,605
26.75%
WisdomTree 5x Long USD Short
EUR
16,554
146.42
2,423,860
24,832
106.67
2,648,723
37.27%
WisdomTree 5x Long GBP Short EUR
5,866
29.18
171,159
8,411
23.02
158,968
-31.53%
WisdomTree 5x Short USD Long
EUR
4,201,236
2.43
10,221,619
3,374,336
4.02
13,549,517
-39.48%
WisdomTree 5x Short GBP Long EUR
13,292
12.89
171,370
8,442
18.83
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Whilst the table above reflects the NAV at 31 December 2024 and 31 December 2023, together with the movement, this does not reflect the
recommended holding period for Currency Securities, which in some cases is one day. Further information on daily percentage change of the
contractual value (at NAV) of the Currency Securities can be found on the WisdomTree website (https://www.wisdomtree.eu/en-gb/products).
Additional information on other financial and operational risks and uncertainties faced by the Company, including further details surrounding
the value of Currency Securities and the Currency Transactions are disclosed in note 12 to the financial statements.
Each Currency Security is a debt instrument whose redemption price is linked to the performance of the underlying currency index. Each class of
Currency Security is issued under limited recourse arrangements whereby the holders have recourse only to the relevant Underlying Assets held
to support the Currency Securities and not to the Underlying Assets of any other class of Currency Security or the Company.
As a result, those cash flows are impacted by both the movements in the levels of the underlying currency indices (the daily payment amount) as
well as the demand amongst investors wishing to buy and sell Currency Securities (resulting in creation and redemption activity), which itself
may be also be driven by movements in the underlying currency indices.
303,149
0.01%
WisdomTree Short CNY Long USD
14,691
38.69
568,339
7,191
36.12
259,754
7.10%
WisdomTree Long CNY Short USD
5,786
52.40
303,173
5,786
52.39
the receipt and payment of the Daily Payment Amounts transferred between the Company and the Currency Transaction counterparty; and
the receipt and payment of the net movements on the daily repurchase transactions (arising from creation and redemption activity, the
impact
of Interest charges and the Management Fees as well as the
WisdomTree Foreign Exchange Limited
Directors’ Report (Continued)
Corporate Governance
Internal Control
ManJer provides management and other services to both the Company and other related party companies issuing exchange-traded products.
Audit Committee
The Company is dependent upon ManJer to provide management and administration services to it. ManJer is licensed under the Financial
Services (Jersey) Law 1998 to conduct classes U and Z of Fund Services Business. ManJer outsources the administration services in respect of the
Company to the Administrator. Documented contractual arrangements are in place with the Administrator which define the areas where the
authority is delegated to them. The performance of the Manager and Administrator are reviewed on an ongoing basis by the Board through their
review of periodic reports.
The Board having reviewed the effectiveness of the internal control systems of the Manager and the Administrator, does not consider that there is
a need for the Company to establish its own internal audit function.
The Board has not established a separate audit committee; instead the Board meets to consider the financial reporting by the Company, the
internal controls, and relations with the external auditor. In addition, the Board reviews the independence and objectivity of the auditor.
- 10 -
www.wisdomtree.eu
There is no standard code of corporate governance in Jersey. The operations, as previously described in the Directors’ Report, are such that the
directors have determined that the Company is not required to apply, and has elected not to voluntarily apply, the UK Corporate Governance
Code.
As the Board is small there is no nomination committee and appointments of new directors are considered by the Board as a whole. The Board
does not consider it appropriate that directors should be appointed for a specific term. Furthermore, the corporate governance framework
implemented and constitution of the Board is such that it is considered unnecessary to identify a senior non-executive director.
The constitution of the Board is disclosed on page 1. The Board meets regularly as required by the operations of the Company, but at least
quarterly to review the overall business of the Company and to consider matters specifically reserved for its review.
During the year the Company did not have any employees or subsidiaries, and there is no intention that this will change. The Company, being a
special purpose company established for the purpose of issuing Currency Securities, has not undertaken any business, save for issuing and
redeeming Currency Securities, entering into the required documents, performing the obligations and exercising its rights in relation thereto, since
its incorporation. The Company does not intend to undertake any business other than issuing and redeeming Currency Securities and performing
the obligations and exercising its rights in relation thereto.
Vinod Rajput
Director
Jersey
28 April 2025
WisdomTree Foreign Exchange Limited
Statement of Directors' Responsibilities
•
•
•
•
•
•
•
By order of the Board
The directors are responsible for preparing the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the
financial statements in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting
Standards Board (“IASB”) and applicable law.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are
required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in
the financial statements;
the Directors’ Report gives a fair view of the development and performance of the Company’s business, including financial
position and the important events that have occurred during the year, and their impact on these financial statements, together
with a description of the principal risks and uncertainties they face.
- 11 -
www.wisdomtree.eu
assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements
comply with the Companies (Jersey) Law 1991. They are responsible for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
With regard to Directive 2004/109/EC, amended by Directive 2013/50/EU (collectively the Transparency Directive), the Central Bank
(Investment Market Conduct) Rules of the Central Bank of Ireland and the Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority, the directors confirm that to the best of their knowledge that:
the financial statements for the year ended 31 December 2024 give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company as required by law and in accordance with IFRS as issued by the IASB; and
Vinod Rajput
Director
Jersey
28 April 2025
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE FOREIGN EXCHANGE LIMITED
- 12 -
Opinion
We have audited the financial statements of WisdomTree Foreign Exchange Limited (the “company”)
for the year ended 31 December 2024 which comprise the Statement of Profit or Loss and Other
Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the
Statement of Changes in Equity and the related notes 1 to 15, including material accounting policy
information. The financial reporting framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IFRS”).
In our opinion, the financial statements:
► give a true and fair view of the state of the company’s affairs as at 31 December 2024 and of its
loss for the year then ended;
► have been properly prepared in accordance with IFRS;
► have been properly prepared in accordance with the requirements of the Companies (Jersey) Law
1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
company in accordance with the ethical requirements that are relevant to our audit of the financial
statements, including the UK FRC’s Ethical Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the company’s ability to continue to adopt the going concern basis of
accounting included:
► We obtained an understanding of management’s rationale for using the going concern basis of
accounting and confirmed our understanding of management’s Going Concern assessment process
including the process they adopted to capture all key factors in their assessment;
► We obtained management’s board approved going concern assessment covering the period of
assessment from the date of signing to 30 April 2026. Management’s assessment has focused on
a combination of;
► Assessing the ongoing viability of the company through continued involvement of its Currency
Transaction Counterparty and Authorised Participants;
► Assessing the ongoing ability of WisdomTree Management Jersey Limited (“ManJer”) to
continue to meet its obligations as manager and pay all expenses of the company. This
includes consideration of the assets under management of all managed issuer entities (“Issuer
Platform”) which includes this company. In assessing this ability management considered the
fixed and variable operating costs that could be supported under varying levels of total assets
under management for the Issuer Platform.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE FOREIGN EXCHANGE LIMITED (continued)
- 13 -
► Using our understanding of the business, we evaluated whether the considerations and method
adopted by management in assessing going concern was appropriate.
► We performed reverse stress testing on the forecasts to understand how severe the downside
scenarios would have to be, and the reduction in platform assets under management, to result in
the platform generating insufficient management fees to cover operating costs. We observed
significant headroom in management fee income, at current Assets Under Management (“AUM”)
levels, in excess of fixed and AUM based costs which supports management’s assumption that the
Issuer Platform is able to absorb heightened levels of volatility in AUM.
► We considered whether management’s disclosures, in the Annual Report and financial statements,
sufficiently and appropriately discloses information required in respect of the going concern
assumption applied through consideration of relevant disclosure standards.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the company’s ability
to continue as a going concern for a period to 30 April 2026.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report. However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.
Overview of our audit approach
Key audit
matters
► Valuation of Financial Assets at fair value through profit and loss – Currency
Transactions
► Valuation of Financial Liabilities at fair value through profit and loss – Currency
Securities
Materiality ► Overall materiality of US$1.95m which represents 1% of total assets.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality
determine our audit scope for the company. This enables us to form an opinion on the financial
statements. We take into account size, risk profile, the organisation of the company and effectiveness of
controls, changes in the business environment and the potential impact of climate change when
assessing the level of work to be performed. All audit work was performed directly by the audit
engagement team.
Changes from the prior year
There were no scoping changes compared to the prior year.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE FOREIGN EXCHANGE LIMITED (continued)
- 14 -
Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies.
The company has determined that there are no directly observed impacts of climate change on the
business due to the nature of the company and its operations. This is explained on page 5 in the
corporate social responsibility section, which form part of the “Other information,” rather than the
audited financial statements. Our procedures on these disclosures therefore consisted solely of
considering whether they are materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appear to be materially misstated.
Our audit effort in considering climate change was focused on evaluating management’s assessment of
the impact of climate risk, physical and transition, the adequacy of the company’s disclosures in the
financial statements as set out in note 2 and conclusion that there was no further impact of climate
change to be taken into account as the material assets and liabilities are valued based on market
pricing as required by IFRS.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a
separate opinion on these matters.
Risk Our response to the risk
Key observations
communicated to the Board
Valuation of Financial Assets
at fair value through profit and
loss – Currency Transactions
USD 194,351,614
(2023: USD 278,693,826)
Refer to the Accounting policies
(page 26-27); and Note 7 of the
Financial Statements (pages 30-
31)
Risk that investment values are
misstated or that valuations are
incorrectly calculated, including
as a result of management
override of internal controls.
The Currency Transactions held
comprise a range of currency
derivatives that are used by the
company to provide holders of
issued securities with exposure
that is designed to track
currency movements.
Our response to the risk
comprised:
We walked through the
company’s systems, controls
and process implemented in
respect of the valuation of
Currency Transactions.
We assessed the design of the
company’s systems and controls
implemented in respect of
Currency Transactions
valuation.
In executing our strategy, we
adopted a fully substantive
approach.
We obtained independent
confirmation, from the currency
transactions counterparty, of the
contractual value of contracts as
at the reporting date.
There were no matters identified
during our audit work on
valuation of Currency
Transactions that we brought to
the attention of the Board of
Directors of the company.
Based on our testing we are
satisfied that the valuation of the
Currency Transactions is not
materially misstated.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE FOREIGN EXCHANGE LIMITED (continued)
- 15 -
Risk Our response to the risk Key observations
communicated to the Board
The Currency Transactions are
carried at fair value as a
Financial Asset.
The risk comprises the risk of
errors in both the valuation
methodology applied (including
the risk that the valuation
methodology has not been
determined in accordance with
the terms of the applicable
prospectus) and in the source
and timing of valuation inputs
utilised.
The balance of Currency
Transactions represents in
excess of 99% of the company’s
total assets as at 31 December
2024 (2023: 99%) and therefore
any error in valuation approach
could be significant.
The risk has remained
consistent with that observed in
the prior year.
We agreed the valuation
methodology applied to the
definition set out in the
prospectus and validation of key
inputs used to derive the value
of the Currency Transactions.
This included agreement on a
sample basis of the price of the
referenced currency indices to
external pricing sources as at 31
December 2024 against
relevant IFRS requirements.
We recalculated the value of a
sample of Currency
Transactions held at 31
December 2024, representing
95% of the total value of
Currency Transactions held.
Specifically, in addressing the
risks of management override of
controls, we assessed the
Currency Transactions valuation
for evidence of management
bias, considered whether any
significant unusual transactions
arose based on our
understanding of the Company
and its activities and tested the
appropriateness of journal
entries recorded in the general
ledger and other adjustments
made in the preparation of the
financial statements.
Valuation of Financial
Liabilities at fair value through
profit or loss – Currency
Securities
USD 195,785,517
(2023: USD 278,154,615)
Refer to the Accounting policies
(pages 27-28); and Note 8 of the
Financial Statements (pages 32-
34)
Risk that values of securities in
issue are misstated or that
valuations are incorrectly
captured.
Our response to the risk
comprised:
We walked through the
company’s systems, controls
and process implemented in
respect of the valuation of
Currency Securities.
We assessed the design of the
company’s systems and controls
implemented in respect of
Currency Securities valuation.
In executing our strategy, we
adopted a fully substantive
approach.
There were no matters identified
during our audit work on
valuation of Currency Securities
that we brought to the attention
of the Board of Directors of the
company.
Based on our testing we are
satisfied that the valuation of
Currency Securities is not
materially misstated.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE FOREIGN EXCHANGE LIMITED (continued)
- 16 -
Risk Our response to the risk Key observations
communicated to the Board
The Currency Securities in issue
comprise a range of financial
instruments that provide holders
of issued securities with
exposure to movements in
prices of foreign currency.
The Currency Securities are
carried at fair value as a
Financial Liability.
The risk comprises the risk of
errors in both the valuation
methodology applied and, in the
source, and timing of valuation
inputs utilised.
The balance of Currency
Securities represents in excess
of 99% of the company’s total
liabilities as at 31 December
2024 (2023: 99%) and therefore
any error in valuation approach
could be significant.
The risk has remained
consistent with that observed in
the prior year.
We assessed the
appropriateness of the valuation
methodology applied,
comprising the use of traded
security prices to value the
Currency Securities, against
relevant IFRS requirements.
We independently obtained
security prices using external
pricing sources at the balance
sheet date.
We recalculated the value of
Currency Securities held at
31 December 2024, by
multiplying the security price by
the confirmed security balance
in issue. This represented 100%
of the total value of Currency
Securities in issue.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably
be expected to influence the economic decisions of the users of the financial statements. Materiality
provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the company to be US$1.95 million (2023: US$2.81 million), which is 1%
(2023: 1%) of Total Assets. We believe that Total Assets provides us with an appropriate basis for audit
materiality as Total Assets reflects the relevant exposure of holders of issued securities to the
underlying asset base.
There has been no change in the basis of materiality used compared to the prior year.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce
to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE FOREIGN EXCHANGE LIMITED (continued)
- 17 -
On the basis of our risk assessments, together with our assessment of the company’s overall control
environment, our judgement was that performance materiality was 50% (2023: 50%) of our planning
materiality, namely US$0.98m (2023: US$1.41m). We have set performance materiality in both periods
at this percentage in response to the value of errors identified and corrected in the financial statement
close process.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Board that we would report to them all uncorrected audit differences in excess of
US$0.1m (2023: US$0.14m), which is set at 5% of materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality
discussed above and in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to
11 other than the financial statements and our auditor’s report thereon. The directors are responsible
for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies
(Jersey) Law 1991 requires us to report to you if, in our opinion:
► proper accounting records have not been kept by the company, or proper returns adequate for our
audit have not been received from branches not visited by us; or
► the financial statements are not in agreement with the company’s accounting records and returns;
or
► we have not received all the information and explanations we require for our audit
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 11, the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE FOREIGN EXCHANGE LIMITED (continued)
- 18 -
In preparing the financial statements, the directors are responsible for assessing the company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those
charged with governance of the company and management.
► We obtained an understanding of the legal and regulatory frameworks that are applicable to the
company and determined that the most significant are those that relate to the reporting framework,
comprising IFRS and the Companies (Jersey) Law 1991. In addition, we concluded that there are
certain significant laws and regulations that may have an effect on the presentation and disclosure
of the financial statements being the applicable Listing Rules of the Central Bank of Ireland
(Investment Market Conduct) and UK Listing Authority Rules;
► We understood how WisdomTree Foreign Exchange Limited is complying with those frameworks by
making enquiries of the directors and key management of the administrative service provider. We
corroborated our enquiries through our review of minutes of Board meetings, papers provided to the
board and correspondence received from regulatory bodies and noted no contradictory evidence;
► We assessed the susceptibility of the company’s financial statements to material misstatement,
including how fraud might occur by understanding the investment objectives of the Company and
discussing with management to understand where reporting was considered susceptible to fraud.
Where this risk was considered to be higher, we performed audit procedures in response to the
identified fraud risk. These procedures included testing of transactions to supporting
documentation, testing of specific accounting journal entries, and focused testing, including that
referred to in the key audit matters section above. These procedures were designed to provide
reasonable assurance that the financial statements were free from fraud or error;
► Based on this understanding we designed our audit procedures to identify non-compliance with
such laws and regulations. Our procedures involved reading board minutes to identify any non-
compliance with laws and regulations, a review of any associated reporting submitted to the board
on compliance with laws and regulations and enquiries of members of management of the
appointed administrative service provider;
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE FOREIGN EXCHANGE LIMITED (continued)
- 19 -
► As the Company operates in the asset management industry the Audit Partner assessed the
experience of the engagement team and concluded that the team had the appropriate competence
and capabilities.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters we are required to address
► Following the recommendation from those charged with governance, we were appointed by the
company on 3 December 2019 to audit the financial statements for the year ending 31 December
2019 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is 6
years, covering the years ending 31 December 2019 to 31 December 2024.
► The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the company
and we remain independent of the company in conducting the audit. The audit opinion is consistent
with the additional report to those charged with governance.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Article 113A of the
Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Ove Toennes Svejstrup
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
Date: 28 April 2025
WisdomTree Foreign Exchange Limited
Statement of Profit or Loss and Other Comprehensive Income
2024 2023
Notes USD USD
Income 3 1,600,712 2,064,922
Expenses 3 (1,600,712) (2,064,922)
Result Before Fair Value Movements
3
- -
Change in Contractual and Fair Value of Currency Transactions 7 (36,297,242) 4,749,740
Change in Fair Value of Currency Securities 8 34,324,128 (3,460,026)
(Loss)/Profit for the Year
1,
2
(1,973,114) 1,289,714
The directors consider the Company’s activities as continuing.
Year ended
31 December
Year ended
31 December
1
A non-statutory and non-GAAP Statement of Profit or Loss and Other Comprehensive Income reflecting adjustments representing the movement
in the difference between the value of the Currency Transactions and the price of Currency Securities is set out in note 15.
2
There are no items of Other Comprehensive Income, therefore the Profit / (Loss) for the Year also represents the Total Comprehensive Income
for the Year.
The notes on pages 24 to 43 form part of these financial statements
- 20 -
www.wisdomtree.eu
WisdomTree Foreign Exchange Limited
Statement of Financial Position
2024 2023
Notes USD USD
Assets
Cash and Cash Equivalents 5 129,311 164,054
Cash held for Currency Securities due for settlement 5 732,029 1,043,463
7
Currency Transactions 7 194,351,614 278,693,826
8
Trade and Other Receivables 6 1,784 1,784
Total Assets 195,903,479 280,739,121
Liabilities
Currency Securities 8 195,785,517 278,154,615
Trade and Other Payables 9 129,311 164,054
Total Liabilities 197,335,598 280,198,126
Equity
Stated Capital 10 3 3
Retained Earnings 1,781 1,781
Revaluation Reserve 15 (1,433,903) 539,211
Total Equity (1,432,119) 540,995
Total Equity and Liabilities 195,903,479 280,739,121
Vinod Rajput
Director
The assets and liabilities in the above Statement of Financial Position are presented in order of liquidity from most to least liquid.
The notes on pages 24 to 43 form part of these financial statements
- 21 -
www.wisdomtree.eu
Amounts Payable on Currency Securities Awaiting
Settlement
8
1,352,678
1,488,639
Amounts Payable on Currency Transactions Awaiting
Settlement
7
68,092
390,818
As at
31 December
As at
31 December
Amounts Receivable on Currency Transactions Awaiting
Settlement
620,649
445,176
Amounts Receivable on Currency Securities Awaiting
Settlement
68,092
390,818
The
financial
statements
on
pages
24
to
43
were
approved
and
authorised
for
issue
by
the
board
of
directors
and
signed
on
its
behalf
on 28 April
2025.
WisdomTree Foreign Exchange Limited
Statement of Cash Flows
2024 2023
USD USD
Fees and Expenses Paid (1,635,455) (2,102,309)
Bank Interest 10,440 13,658
Cash used in Operating Activities (1,625,015) (2,088,651)
Cash Flows from Investing Activities
Net Daily Payment Amounts 6,639,526
Net Movement on Currency Transactions 109,166,201
Net Cash Flows from / (used in) Investing Activities 47,546,771 115,805,727
Cash Flows from Financing Activities
Issue of Currency Securities 156,105,518 239,763,220
Redemption of Currency Securities (202,373,451) (357,250,161)
Net Cash Flows (used in) / from Financing Activities (46,267,933) (117,486,941)
Net Movement in Cash and Cash Equivalents (346,177)
(3,769,865)
Cash and Cash Equivalents at the Beginning of the Year 1,207,517 4,977,382
Net Movement in Cash and Cash Equivalents
(346,177) (3,769,865)
Cash and Cash Equivalents at the End of the Year 861,340 1,207,517
Cash and Cash Equivalents at the End of the Year is represented by:
Cash and Cash Equivalents 129,311 164,054
Cash held for Currency Securities due for settlement 732,029 1,043,463
861,340 1,207,517
Year ended
31 December
Year ended
31 December
Cash Flows from Investing Activities represent amounts linked to Currency Transactions entered into with a Currency Transaction Counterparty,
and which are used to enter into USD, GBP or EUR denominated daily repurchase transactions with the Currency Transaction Counterparty in
exchange for eligible collateral on the terms described in the Company’s Prospectus (collectively the “Underlying Assets”). On each day the
Currency Transaction Counterparty is required to pay back the USD, GBP and EUR amounts in exchange for the eligible collateral held the
previous day, which allows the Company to enter into new daily repurchase transactions in exchange for eligible collateral required on that day,
however in accordance with the terms of a supplemental agreement to the Collateral Administration Master Agreement those new daily
repurchase transactions can be paired with maturing deals on the previous daily repurchase transactions meaning that the net amounts (in each of
USD, GBP and EUR) are transferred each day. A daily payment amount will also be calculated in respect of each Currency Transaction on each
day to reflect the movement in the relevant currency index and this amount will also be payable by either the Company or the Currency
Transaction Counterparty. Each of these cash flows are reported on a net basis because the cash receipts and payments relates to items in which
the turnover is quick, the amounts are large, and the maturities are short.
Under the terms of the service agreement with ManJer, it receives creation and redemption fees directly from the holders of Currency Securities
who have entered into an authorised participant agreement with the Company (“Authorised Participants”), and accordingly, there are no related
cash flows through the Company in respect of creation and redemption fees. These fees are disclosed in note 3.
The notes on pages 24 to 43 form part of these financial statements
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(37,534,465)
85,081,236
WisdomTree Foreign Exchange Limited
Statement of Changes in Equity
Stated Retained Revaluation Total
Capital Earnings Reserve Equity
Notes USD USD USD USD
Opening Balance at 1 January 2023
3 1,781 (750,503) (748,719)
1,289,714 1,289,714
Transfer to Revaluation Reserve 15 - (1,289,714) 1,289,714 -
Balance at 31 December 2023
3
3 1,781 539,211 540,995
Opening Balance at 1 January 2024
3 1,781 539,211 540,995
(1,973,114) (1,973,114)
Transfer to Revaluation Reserve 15 - 1,973,114 (1,973,114) -
Balance at 31 December 2024
3
3 1,781 (1,433,903) (1,432,119)
3
A non-statutory and non-GAAP Statement of Changes in Equity reflecting adjustments representing the difference between the value of
Currency Transactions and the price of Currency Securities is set out in note 15.
The notes on pages 24 to 43 form part of these financial statements
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Result and Total Comprehensive Expense for
the Year
-
-
Result and Total Comprehensive Income for
the Year
-
-
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements
1.
General Information
(1)
(2)
WisdomTree Foreign Exchange Limited (the “Company”) is a company incorporated and domiciled in Jersey. The address of the registered office
is IFC 5, St Helier, Jersey, JE1 1ST.
The Company’s principal activity is the issue and listing of collateralised currency securities (“Currency Securities”). Currency Securities are
undated secured limited recourse financial instruments designed to provide investors with long or short exposure to the daily foreign exchange
performance of developed or emerging market currencies or baskets of developed market currencies measured against the US Dollar (“USD”), the
Euro (“EUR”) or the British Pound (“GBP”), less applicable fees. This is achieved by the Currency Securities tracking published currency
indices. The price of the Currency Securities is calculated on a daily basis to reflect the change in the relevant currency index and takes into
account the payment of a management fee and a daily spread. The Currency Securities are denominated in USD, EUR or GBP.
No creation or redemption fees are payable to the Company when investors trade in the Securities on a listed market such as the London Stock
Exchange.
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Under the terms of the service agreement with ManJer, the Company recognises a result before fair value movements of nil for each period.
Each time Currency Securities are issued or redeemed, corresponding Currency Transactions between the Company and the Currency Transaction
Counterparty are created or closed by the Company. Cash received by the Company linked to Currency Transactions entered into with a Currency
Transaction Counterparty is used to enter into a USD, GBP or EUR denominated daily repurchase transaction with the Currency Transaction
Counterparty in exchange for eligible collateral on the terms described in the Company’s Prospectus (collectively the “Underlying Assets”). On
each day the Currency Transaction Counterparty is required to pay back the USD, GBP and EUR amounts in exchange for the eligible collateral
held the previous day, which allows the Company to enter into new daily repurchase transactions in exchange for eligible collateral required on
that day, however in accordance with the terms of a supplemental agreement to the Collateral Administration Master Agreement those new daily
repurchase transactions can be paired with maturing deals on the previous daily repurchase transactions meaning that the net amounts (in each of
USD, GBP and EUR) are transferred each day. This daily process therefore ensures that eligible collateral (at market fair value) received from the
Currency Transaction Counterparty represents at least 100% of the exposure of the daily repurchase transaction receivable on a daily basis. A
daily payment amount will also be calculated in respect of each Currency Transaction on each day to reflect the movement in the relevant
currency index and this amount will also be payable by either the Company or the Currency Transaction Counterparty.
Each class of Currency Security is issued under limited recourse arrangements whereby the holders have recourse only to the relevant Underlying
Assets held to support the Currency Securities and not to the Underlying Assets of any other class of Currency Security or to the Company. The
Company does not make gains from trading in the Underlying Assets. As a result, (and with the exception of the impact of management fees),
from a commercial perspective gains and losses in respect of Currency Transactions will always be offset by a corresponding loss or gain on the
Currency Securities and therefore, commercially the Company does not retain any net gains or losses or net risk exposures. However, the
difference in valuation between Currency Transactions and Currency Securities creates a mis-match between accounting values reported within
these financial statements. This difference in valuation would be reversed on a subsequent redemption of the Currency Securities and cancellation
of the corresponding Currency Transactions. Further details are disclosed within the Accounting Policies and in note 15 with additional
information regarding the risks of the Company disclosed in note 12. Furthermore, the Company presents an adjusted Statement of Profit or Loss
and Other Comprehensive Income and an adjusted Statement of Changes in Equity in note 15 of the financial statements to reflect the economic
results of the Company through the reversal of the difference in valuation between Currency Transactions and Currency Securities given the gain
or loss would be reversed on a subsequent redemption of the Currency Securities and cancellation of the corresponding Currency Transactions,
and therefore will not be realised.
Exchange-traded products are not typically actively managed, are significantly lower in cost when compared to actively managed mutual funds
and are easily accessible to investors. No trading or management of futures contracts is required of the Company because the Company has
entered into arrangements to acquire an equivalent asset exposure from a third party which fully hedges the exposure of the Company.
The Company is entitled to:
a management fee which is calculated by applying a fixed percentage to the Contractual Value of Securities in issue on a daily
basis, less any expenses directly incurred (the “Management Fee”); and
apply creation and redemption fees on the issue and redemption of the Securities.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
2.
Accounting Policies
Basis of Preparation
Material Accounting Estimates and Judgements
Significant Estimates
Significant Judgements
Going Concern
The presentation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company’s accounting policies. The Company makes estimates and
assumptions that affect the reported amounts of assets and liabilities. Estimates are continually evaluated and based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The directors do not consider that any significant estimates have been applied in the preparation of these financial statements.
The key accounting judgement required to prepare these financial statements is in respect of the presentation of non-statutory and non-GAAP
adjustments to the Statement of Profit or Loss and Other Comprehensive Income and the Statement of Changes in Equity, as disclosed in note 15.
The directors continue to monitor and assess the impact of geopolitical conflicts on the assets under management of the Company and will take
any potential actions needed or as required under the terms of the prospectus, as facts and circumstances are subject to change and may be
specific to investments and jurisdictions. The nature of the Company’s business dictates that the outstanding Currency Securities may be
redeemed at any time by Authorised Participants and in certain circumstances by individual holders and also, in certain circumstances, may be
compulsorily redeemed by the Company. As the redemption of Currency Securities will always coincide with the closing of an equal amount of
Currency Transactions, liquidity risk is mitigated through this process which is considered to minimize exposure to liquidity risk. All other
expenses of the Company are met by ManJer. The directors closely monitor the financial position and performance of ManJer, its assets under
management, and therefore its related revenue streams, in respect of fulfilling the obligations under the services agreement.
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The material accounting policies of the Company are described below.
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the
International Accounting Standards Board (“IASB”), and interpretations issued by the International Financial Reporting Interpretations
Committee of the IASB. The financial statements have been prepared under the historical cost convention, except for certain financial assets and
financial liabilities held at fair value through profit or loss.
The board of directors (the “Board”) has concluded specifically that climate change, including physical and transition risks, does not have a
material impact on the recognition and separate measurement considerations of the assets and liabilities in these financial statements as at 31
December 2024. This conclusion is based on the fact that assets are reported at fair value under IFRS, are short dated, and as set out in note 12 are
categorised as level 2 due to the use of observable, verifiable inputs, including use of third party information sources within the agreed pricing
formulae (set out in the Prospectus). The liabilities are valued utilising listed market prices at the period end. These observable inputs and market
prices will reflect wider market sentiment, which inherently includes market perspectives relating to the impact of climate change.
The net reported position on balance sheet, including in instances where a deficit is reported, is not considered to impact the going concern
position of the Company as this position results solely due to the unrealised gains or losses on Currency Transactions and Currency Securities due
to the accounting measurement basis applied in accordance with IFRS. As Currency Transactions are held to support Currency Securities, any
deficit or surplus reported on unrealised positions would be reversed on a subsequent redemption of the Currency Securities and the related
transfer of Currency Transactions. A reported deficit is not considered indicative of any issues relating to solvency of the Company and the
directors are satisfied that any obligations arising in respect of the Currency Securities can be managed in accordance with the terms of the
applicable Prospectus. The directors consider the operations of the Company to be ongoing, with a reasonable expectation that the Company has
adequate resources to continue in operational existence until 30 April 2026 (being the period of assessment), and accordingly these financial
statements have been prepared on the going concern basis.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
Accounting Standards
(a)
Standards, amendments and interpretations considered by the Company:
(b)
New and revised IFRSs in issue but not yet effective:
Currency Transactions
•
•
The directors do not expect the adoption of the above standards, amendments and interpretations that are in issue but not yet
effective will have a material impact on the financial statements of the Company in future periods.
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The Currency Securities are backed Currency Transactions, which are unfunded currency transactions with terms corresponding to the terms of
Currency Securities. The Currency Transactions are made up of two components on each day:
Daily Repurchase Transactions: Cash received by the Company (linked to Currency Transactions entered into with a Currency
Transaction Counterparty) which is used to enter into a USD, GBP or EUR denominated daily repurchase transaction with the
Currency Transaction Counterparty in exchange for eligible collateral on the terms described in the Company’s Prospectus. Each
day the Currency Transaction Counterparty pays back the USD, GBP and EUR amounts in exchange for the eligible collateral held
the previous day, allowing the Company to enter into new daily repurchase transactions in exchange for eligible collateral required
on that day, however in accordance with the terms of a supplemental agreement to the Collateral Administration Master
Agreement those new daily repurchase transactions can be paired with maturing deals on the previous daily repurchase
transactions meaning that the net amounts (in each of USD, GBP and EUR) are transferred each day. This daily process ensures
that eligible collateral (at market fair value) received from the Currency Transaction Counterparty represents at least 100% of the
exposure of the daily repurchase transaction receivable on a daily basis.
Daily Payment Amount: calculated in respect of each Currency Transaction on each day to reflect the movement in the relevant
currency index and this amount will be payable by either the Company or the Currency Transaction Counterparty.
• IAS 7 and IFRS 7 - Supplier Finance Arrangements (effective for annual periods beginning on or after 1 January 2025)
• IFRS 9 and IFRS 7 (amendments) - Classification and measurement of financial instruments (effective for annual periods
beginning on or after 1 January 2026)
• IFRS 16 - Lease Liability in a Sale and Leaseback (effective for annual periods beginning on or after 1 January 2025)
• IFRS 18 - Presentation and disclosure in financial statements (effective for annual periods beginning on or after 1 January
• IFRS 19 - Subsidiaries without public accountability: disclosures (effective for annual periods beginning on or after 1 January
2027)
• IAS 21 (amendments)- The effects of change in foreign exchange rates: lack of exchangeability (effective for annual periods
beginning on or after 1 January 2025)
The following are standards and amendments effective for accounting periods beginning on or after 1 January 2025 but which did
not have any effect on the financial statements of the Company
• Amendments to IAS 1 - Classification of Liabilities as current or non-current
• Amendments to IFRS 16 - Lease liability in a sale and leaseback transaction
There were no other new standards, amendments and interpretations adopted in the current year that resulted in a significant effect
on these financial statements.
The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective:
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
2.
Accounting Policies (continued)
i) Issue and Redemption
Financial assets are recognised and de-recognised on the transaction (trade) date.
ii) Classification
•
•
iii) Pricing
Currency Securities
i) Issue and Redemption
Financial liabilities are recognised and de-recognised on the transaction (trade) date.
ii) Classification at fair value through Profit or Loss
iii) Pricing
The Currency Securities are classified as financial liabilities measured at fair value through profit or loss under IFRS 9 due to an
embedded derivative. This also significantly reduces a measurement or recognition inconsistency that would otherwise arise from
measuring assets or liabilities or recognising the gains and losses on them on different bases.
IFRS 13 requires the Company to identify the principal market and to utilise the available price within that principal market. The
directors consider the stock exchanges where the Currency Securities are listed to be the principal market and as a result the fair
value of the Currency Securities is the on-exchange price as quoted on the stock exchange demonstrating active trading with the
highest trading volume on each day that the price is obtained. The Currency Securities are priced using the latest traded price on
(or before) the Statement of Financial Position date.
Each time a Currency Security is issued or redeemed by the Company, a corresponding number and value of Currency
Transactions are created or closed with Morgan Stanley & Co. International plc (“Morgan Stanley”), which represent financial
assets of the Company. Upon initial recognition, the value is recorded using the price calculated based on the formula set out in the
Prospectus.
Each Currency Transaction comprises two financial instruments whose aggregate cancellation price is linked to the performance of
the relevant currency index. The Currency Transactions are classified as financial assets, and are recognised as follows:
the amount receivable from the Currency Transaction Counterparty in respect of the Daily Repurchase Transactions is recognised
at amortised cost; and
the Daily Payment Amount is recognised at fair value through profit or loss under IFRS 9 due to this being a derivative financial
instrument.
The fair value of the Daily Payment Amount component of the Currency Transactions is calculated based on the movement in the
performance of the relevant MSFXsm Currency Indices. The MSFXsm Currency Indices are total return indices and are calculated
and published by Morgan Stanley and are calculated in accordance with the MSFXsm Indices Manual.
The combination of the value of the Daily Repurchase Transactions and the fair value of the Daily Payment Amount represents the
fair value of the Currency Transactions. This valuation methodology is consistent with the formula set out in the Prospectus
whereby a single price is established for each Currency Transaction as at the end of each Pricing Day (the Contractual Value).
Each time a Currency Security is issued or redeemed by the Company a corresponding number and value of Currency Transactions
are created or closed with Morgan Stanley. The Currency Securities give rise to the financial liabilities. Upon initial recognition,
the fair value is recorded using the price calculated based on the formula set out in the Prospectus, referred to as the “Contractual
Value” (see on next page).
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Each Currency Security comprises a financial instrument whose redemption price is linked to the performance of the relevant
currency index adjusted by the applicable fees and expenses.
Consequently, a difference arises between the value of Currency Transactions (held to support the Currency Securities) and
Currency Securities (at market value) presented in the Statement of Financial Position. This difference is reversed on a subsequent
redemption of the Currency Securities and closure of the corresponding Currency Transactions.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
2.
Accounting Policies (continued)
Currency Transactions and Currency Securities Awaiting Settlement
Cash, Cash Equivalents and Overdraft Facilities
Other Financial Assets and Liabilities
Reserves
Income
i) Management Fees
• 3x and 5x Leveraged Currency Securities have a management fee rate of 0.98% per annum;
• CNY Currency Securities have a management fee rate of 0.59% per annum; and
• All remaining classes of Currency Securities have a management fee rate of 0.39% per annum.
ii) Creation and Redemption Fees
The Company derives its income over time (in respect of management fees), and at a point in time (in respect of creation and redemption fees) as
follows:
Management Fees are calculated by applying a fixed percentage to the Contractual Value of Currency Securities in issue on a daily
basis in accordance with the terms of the securities issued:
The issue and redemption of Currency Securities, and the creation or closure of Currency Transactions, is accounted for on the transaction date.
The transaction will not settle until two days after the transaction date. Where transactions are awaiting settlement at the year end, the value of the
Currency Transactions and the Currency Securities due to be settled is separately disclosed within the relevant assets and liabilities on the
Statement of Financial Position. The fair value of these receivables and payables is considered equivalent to their carrying value.
The Company has established separate Cash Accounts (GBP, USD and EUR) with the Bank of New York Mellon (“BoNY”) as well as Overdraft
Facilities, linked to each of the Cash Accounts, which together facilitate the cash flows related to the receipt and payment of amounts on the
creation and redemption of Securities as well as the transfer of the Daily Payment Amounts required for the subsequent days daily repurchase
transaction. Cash and Cash Equivalents include deposits held on call with BoNY.
Other financial assets and liabilities are non-derivative financial assets and liabilities including trade and other receivables and trade and other
payables with a fixed payment amount and are not quoted in an active market. After initial measurement the other financial assets and liabilities
are subsequently measured at amortised cost using the effective interest method less any allowance for expected credit losses. The effective
interest method is a method of calculating the amortised cost of an instrument and of allocating interest over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash flows (including all fees paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a
shorter period, to the net carrying amount on initial recognition. Impairment losses, including reversals of impairment losses and impairment
gains, are recorded through profit or loss.
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A revaluation reserve and a retained earnings reserve are maintained within equity. All profit or loss is taken to the retained earnings reserve at the
end of the accounting period to which it relates and the gain or loss relating to the mis-match of accounting values is transferred to the revaluation
reserve, which the directors have deemed to be non-distributable, as the balance relates to unrealised gains and losses on Currency Transactions
(held to support the Currency Securities) and Currency Securities, which are reversed on a subsequent redemption of the Currency Securities and
the related cancellation of Currency Transactions and will therefore not be realised.
Fees for the issue and redemption of Currency Securities are recognised at the fair value of the consideration expected to be
received, on the date on which the transaction becomes legally binding. Accrued creation and redemption fees are invoiced on a
quarterly basis and settled directly between ManJer and the relevant Authorised Participants.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
2.
Accounting Policies (continued)
Foreign Currency
Segmental Reporting
3.
Result Before Fair Value Movements
2024 2023
USD USD
Creation and Redemption Fees
-
-
Management Fees
1,590,272
2,051,265
Bank interest received
10,440
13,657
Total Income 1,600,712
2,064,922
ManJer Fees
(1,600,712)
(2,064,922)
FX Counterparty Fees
-
-
Total Operating Expenses (1,600,712)
(2,064,922)
Result Before Fair Value Movements
- -
The financial statements of the Company are presented in the currency in which a majority of the Currency Transactions entered into and the
Currency Securities issued by the Company are denominated (its functional currency). For the purpose of the financial statements, the results and
financial position of the Company are expressed in United States Dollars, which is the functional currency of the Company, and the presentation
currency of the financial statements.
Transactions in foreign currencies are initially recorded at the spot rate at the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies at the year-end date are translated at rates ruling at that date. Creation and redemption fees are translated at the average rate
for each month in which they are incurred. The resulting differences are accounted for through profit or loss.
A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment), or in
providing products and services within a particular economic environment (geographical segment), which is subject to risks and rewards that are
different from those of other segments. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of
the Company that are regularly reviewed by the Chief Operating Decision Maker (“CODM”) in order to allocate resources to the segments and to
assess their performance. The CODM has been determined as the board of directors.
Whilst the Company has a number of different Currency Securities in issue, the financial information reviewed by CODM is not segregated by
those different Currency Securities and therefore the Board have concluded that these components do not meet the criteria of operating segments.
Furthermore, marketing of the Currency Securities is undertaken on a centralised basis and the terms of the Currency Securities of any class rank
pari passu in all respects irrespective of stock exchange listing.
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As a result, the CODM determined that the Company is operating a single segment or product group, Currency Securities, and one geographical
segment which is Europe. Therefore the Company discloses its results on an equivalent aggregated form and does not provide any further
segmental information. In addition, the Company has no single major customer from which greater than 10% of income is generated. All
information relevant to the understanding of the Company’s activities is included in these financial statements.
Result Before Fair Value Movements for the year comprised:
Year ended
31 December
Year ended
31 December
Audit Fees for the year of GBP 49,883 will be met by ManJer (2023: GBP 34,399).
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
4.
Taxation
5.
Cash, Cash Equivalents and Overdraft Facility
2024 2023
USD USD
Cash and Cash Equivalents
129,311
164,054
Cash held for currency Securities due for settlement
732,029
1,043,463
861,340
1,207,517
Overdraft Facility
-
-
-
-
6.
Trade and Other Receivables
2024 2023
USD USD
Amounts Receivable from Related Party
1,781
1,781
Amounts Receivable on Stated Capital
3
3
1,784
1,784
7.
Currency Transactions
2024 2023
USD USD
(36,297,242)
4,749,740
Currency Transactions at Fair Value
194,351,614
278,693,826
The Company is subject to Jersey Income Tax. During the year the Jersey Income Tax rate applicable to the Company is zero percent (2023: zero
percent).
As at
31 December
As at
31 December
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Under the terms of the Collateral Administration Master Agreement, the Company has established and maintains Custody Accounts with BoNY
(as both Custodian and Collateral Administrator) in respect of its dealings with the Currency Transaction Counterparty. The Company has also
established separate Cash Accounts (GBP, USD and EUR) with BoNY, as well as Overdraft Facilities, linked to each of the Cash Accounts,
which together facilitate the cash flows related to the receipt and payment of amounts on the creation and redemption of Securities as well as the
transfer of the Daily Payment Amounts required for the subsequent days daily repurchase transaction.
The net amount of cash held, or overdraft facility utilised, at the close of each day is equal to the amounts accrued but not yet transferred in
respect to management fees, net of any interest applied to the Cash Accounts by BoNY as well as cash transferred out from the Daily Repurchase
Transactions to facilitate the redemption of Currency Securities awaiting settlement.
As at
31 December
As at
31 December
The fair value of these receivables is equal to the carrying value.
As at
31 December
Change in Contractual and Fair Value of Currency Transactions
As at
31 December
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
7.
Currency Transactions (continued)
•
•
2024 2023
USD USD
Opening Currency Transactions
389,358,995
Daily Repurchase Transactions
(108,775,383)
Net Daily Payments Amounts
(6,639,526)
Change as a result of Daily Payment Amounts (Invested into Currency Transactions)
4,749,740
Closing Currency Transactions 194,351,614
278,693,826
2024 2023
USD USD
(552,557)
(54,358)
Daily Repurchase Transactions
278,710,950
Daily Payment Amount
(976,295)
Closing Currency Transactions 194,351,614
278,693,826
As at 31 December 2024, there were certain Currency Transactions awaiting settlement in respect of the creation or redemption of Currency
Securities with transaction dates before the year end and settlement dates in the following year:
The amount of cash received from the Currency Transactions (Daily Repurchase Transactions) and held (per note 5) in respect of
Currency Securities awaiting settlement is USD 732,029 (2023: USD 1,043,463), with a further amount receivable on Currency
Transactions awaiting settlement of USD 620,649 (2023: USD 445,176), giving a total unsettled balance of USD 1,352,678
(2023: USD 1,488,639).
The amount payable on Currency Transactions (Daily Repurchase Transactions) awaiting settlement is USD 68,092 (2023: USD
390,818).
Year ended
31 December
The Currency Transactions are unfunded currency transactions with terms corresponding to the terms of Currency Securities. The Currency
Transactions are made up as follows:
As at
31 December
As at
31 December
Currency Transactions awaiting settlement (and transfer into Daily
Amounts received on Currency Transactions (awaiting transfer into
Daily Repurchase Transactions)
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452,275
1,013,529
The below table shows a reconciliation of changes in the Currency Transactions, based upon the underlying factors that result in changes, and
does not represent the transaction cash flows which are settled on a net basis as described in the Statement of Cash Flows:
Year ended
31 December
The daily payment amount constitutes a derivative which is calculated in respect of each Currency Transaction on each day to reflect the
movement in the relevant currency index and this amount will be payable by either the Company or the Currency Transaction Counterparty.
194,190,968
260,928
278,693,826
(85,579,435)
37,534,465
(36,297,242)
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
8.
Currency Securities
2024 2023
USD USD
Change in Fair Value of Currency Securities
34,324,128
(3,460,026)
Currency Securities at Fair Value
195,785,517
278,154,615
2024 2023
USD USD
Change in Contractual Value for the Year
36,297,242
(4,749,740)
Currency Securities at Contractual Value
194,351,614
278,693,826
• The amount receivable on Currency Securities awaiting settlement is USD 68,092 (2023: USD 390,818).
• The amount payable on Currency Securities awaiting settlement is USD 620,649 (2023: USD 1,488,639).
Whilst the Currency Securities are quoted on the open market, the Company’s ultimate liability relates to its contractual obligations to issue and
redeem Currency Securities at set prices on each trading day. These prices are based on agreed formulae, and are equal to the published net asset
value (“NAV”) of each class of Currency Security. Therefore, the actual contractual issue and redemption of Currency Securities occur at a price
that corresponds to the fair value of the Currency Transactions. As a result, the Company has no net exposure to gains or losses on the Currency
Securities and Currency Transactions.
The Company measures the Currency Securities at their fair value in accordance with IFRS 13 rather than at the Contractual Value (as described
in the Prospectus). The fair value is the price quoted on stock exchanges or other markets where the Currency Securities are listed or traded.
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As at 31 December 2024, there were certain Currency Securities awaiting settlement in respect of creations or redemptions with transaction dates
before the year end and settlement dates in the following year:
The fair values and changes thereof during the year based on prices available on the open market as recognised in the financial statements are:
As at
31 December
As at
31 December
The Contractual Values and changes thereof during the year based on the contractual settlement values are:
As at
31 December
As at
31 December
The gain or loss on the difference between the value of the Currency Transactions and the fair value of Currency Securities would be reversed on
a subsequent redemption of the Currency Securities and closure of the corresponding Currency Transactions. Refer to note 15 for the non-
statutory and non-GAAP adjustments which reflect this reversal.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
8.
Currency Securities (continued)
2024 2023
USD USD
Opening Currency Securities 278,154,615
390,109,498
Securities Created
155,782,792
240,154,038
Securities Redeemed
(202,237,490)
(353,517,682)
Management Fee
(1,590,273)
(2,051,265)
Change in Fair Value
(34,324,127)
3,460,026
Closing Currency Securities at Fair Value 195,785,517
278,154,615
The below tables shows a reconciliation of the movement on financing activities:
2024 2023
USD USD
Opening Currency Securities 278,154,615
390,109,498
Cash Received from the Issue of Currency Securities
156,105,518
239,763,220
Cash Paid on the Redemption of Currency Securities
(202,373,451)
(356,804,985)
Net Cash Movements (46,267,933)
(117,041,765)
Management Fees
(1,590,273)
(2,051,265)
Non-Cash Movements on Amounts Receivable and Payable
(186,765)
3,678,121
Non-Cash Change in Fair Value
(34,324,127)
3,460,026
Net Non-Cash Movements (36,101,165)
5,086,882
Closing Currency Securities
195,785,517
278,154,615
9. Trade and Other Payables
2024 2023
USD USD
ManJer Fees Payable
129,311
164,054
The below tables shows a reconciliation of changes in the Currency Securities, being liabilities arising from financing activities:
Year ended
31 December
Year ended
31 December
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www.wisdomtree.eu
Year ended
31 December
Year ended
31 December
As at
31 December
As at
31 December
The fair value of these payables is equal to the carrying value. The ManJer Fee Payable is due to be settled within 12 months of the year end.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
10. Stated Capital
2024 2023
USD USD
2 Shares of Nil Par Value, Issued at GBP 1 Each and Fully Paid
3
3
11.
Related Party Disclosures
Fees charged by ManJer during the year:
2024 2023
USD USD
ManJer Fees
1,590,272
2,051,265
The following balances were due to ManJer at year end:
2024 2023
USD USD
Amount Receivable
1,781
1,781
ManJer Fees Payable
(129,311)
(164,054)
(127,530)
(162,273)
The following balances were due from HoldCo at the year-end:
2024 2023
USD USD
Stated Capital
3
3
The Company can issue an unlimited capital of nil par value shares in accordance with its Memorandum of Association.
All Shares issued by the Company carry one vote per Share without restriction and carry the right to dividends. All Shares are held by
WisdomTree Holdings Jersey Limited (“HoldCo”).
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www.wisdomtree.eu
Entities and individuals which have a significant influence over the Company, either through ownership or by virtue of being a director of the
Company, are considered to be related parties. In addition, entities with common ownership to the Company and entities with common directors
are also considered as related parties.
Year ended
31 December
Year ended
31 December
As at
31 December
As at
31 December
As at
31 December
As at
31 December
No director has a service contract with the Company. The directors of the Company who are employees within the WisdomTree, Inc group do not
receive separate remuneration in their capacity as directors of the Company. The directors of the Company who are employees of Apex Financial
Services (Alternative Funds) Limited (“Administrator”) do not receive separate remuneration in their capacity as directors of the Company,
however Apex Financial Services (Alternative Funds) Limited receives a fee from ManJer which includes services in respect of the Company,
including for the provision of directors who are employees of Apex Financial Services (Securities) Limited.
As at
31 December
As at
31 December
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
11.
Related Party Disclosures (continued)
12.
Financial Risk Management
(a) Credit Risk
•
• cash received in respect of the creation of further Currency Securities; less
• cash to be paid on that subsequent day to satisfy the redemption of Currency Securities; less
• any cash which reflects accrued but unpaid management fees.
On 14th June 2024 R&H Fund Services (Jersey Limited (“R&H”) resigned as Administrator, and Apex Financial Services (Alternative Funds)
Limited were appointed as Administrator. Vinod Rajput, Olivia Vuillemin and David Middleton (up to his date of resignation) are employees of
Apex. During the year, R&H and Apex charged ManJer administration fees which include the company and other entities for which the ManJer is
the Manager and R&H and Apex is the Administrator. Total fee amounting GBP 1,687,046 (31 December 2023: GBP 1,221,529) translated in
USD 2,114,712 (31 December 2023: USD 1,560,381) of which GBP 471,388 (31 December 2023: GBP 291,402) translated in USD 590,885 (31
December 2023: USD 372,237) was outstanding at the year end.
Peter Ziemba is an executive officer of WisdomTree, Inc. and Bryan Governey is European General Counsel for the WisdomTree, Inc group.
- 35 -
www.wisdomtree.eu
The Company is exposed to a number of risks arising from its activities including credit risk, liquidity risk, settlement risk and market risk. The
Board is responsible for the overall risk management approach and for approving the risk management strategies and principles. The Board meets
frequently to consider the risk exposures of the Company and to determine appropriate management policies. The risk management policies
employed by the Company to manage these are discussed below. The information provided below is not intended to be a comprehensive summary
of all the risks associated with the Currency Securities and investors should refer to the most recent Prospectus for a detailed summary of the risks
inherent to investing in the Currency Securities. Any data provided should not be used or interpreted as a basis for future forecast or investment
performance. The Currency Securities are subject to normal market fluctuations and other risks inherent to investing in securities and other
financial instruments. There can be no assurance that any appreciation in the value of securities will occur, and the capital value of an investor’s
original investment is not guaranteed. The value of investments may go down as well as up, and an investor may not get back the original amount
invested.
Credit risk primarily refers to the risk Authorised Participants or the Currency Transaction Counterparty will default on their contractual
obligations resulting in financial loss. Each class of Currency Security is issued under limited recourse arrangements whereby the holders have
recourse only to the relevant Currency Transactions (held to support the Currency Securities) and not to the Currency Transactions of any other
class of Currency Securities or to the Company, therefore limiting the credit risk of the Company in connection with the issue of the Currency
Securities.
The Company has entered into a facility agreement with Morgan Stanley enabling the Company to create and cancel Currency Transactions on an
on-going basis. Morgan Stanley is currently the only Currency Transaction Counterparty. If Morgan Stanley discontinued the provision of
Currency Transactions and the existing Currency Transactions expired without a replacement Currency Transaction Counterparty being
appointed, the Company would be required to redeem the outstanding Currency Securities. There are compulsory redemption provisions as
outlined in the prospectus that can be triggered by the Company or the Currency Transaction Counterparty in certain circumstances whereby a
compulsory redemption of all Currency Securities in issue would be undertaken. The total carrying amount of the Currency Transactions, cash &
cash equivalents, cash held for currency securities due for settlement, amounts receivable awaiting settlement and trade and other receivables best
represent the maximum such credit risk exposure at the Statement of Financial Position date. At the reporting date the Company’s Currency
Transactions amounts receivable awaiting settlement and trade and other receivables are detailed on the Statement of Financial Position.
Cash received by the Company linked to Currency Transactions entered into with a Currency Transaction Counterparty is used to enter into a
USD, GBP or EUR denominated daily repurchase transaction with the Currency Transaction Counterparty in exchange for eligible collateral on
the terms described in the Company’s Prospectus. On each day the Currency Transaction Counterparty is required to pay back the USD, GBP and
EUR amounts in exchange for the eligible collateral held the previous day, which allows the Company to enter into new daily repurchase
transactions in exchange for eligible collateral required on that day, however in accordance with the terms of a supplemental agreement to the
Collateral Administration Master Agreement those new daily repurchase transactions can be paired with maturing deals on the previous daily
repurchase transactions meaning that the net amounts (in each of USD, GBP and EUR) are transferred each day. The daily repurchase transaction
entered into on each subsequent day is adjusted to reflect:
the aggregate net amount payable or receivable between the Company and the Currency Transaction Counterparty under all
Currency Transactions; plus
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
(b ) Liquidity Risk
(c) Settlement Risk
The Board monitors credit risk exposure, including through an assessment of the credit rating Morgan Stanley (Morgan Stanley: A+ (2023: A+)
(Fitch, 31 May 2024), in order to ensure the Company’s exposure is managed, and has continued to do so more closely with a focus on any the
potential impact of, or developments relating to both the Ukraine Crisis.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities as they fall
due. The Company’s payables are all payable on demand and generally settled on a short-term basis. Liquidity risk in respect of payables related
to expenses is reduced as amounts in respect of the Management Fee are secured by the Company on a daily basis, in order for the ManJer
expense accumulated (for the month, in arrears) to be settled once invoiced, and amounts in respect of the creation and redemption fees are
transferred from the relevant counterparties directly to ManJer and there are no related cash flows through the Company.
www.wisdomtree.eu
website.
The Currency Securities do not have a contractual maturity date and will only be redeemed at the request of the holder of the security, which may
be requested at any time, or in the case of a compulsory redemption. Generally, only Authorised Participants can submit applications and
redemptions directly with the Company.
The agreements with the Currency Transaction Counterparty include limits (both daily and in the aggregate) on the issue and cancellation of
Currency Transactions, and the Company is not obliged to issue and redeem Currency Securities in excess of those limits under the terms of the
security agreement. Furthermore, liquidity risk of the Company is mitigated because the rights and obligations on the issue redemption of the
Currency Securities and the issue and cancellation of Currency Transactions are matched, therefore the Company does not have to wait for a
longer-term contract to mature in order to pay its debts to ex-security holders. Consequently, the Company has not presented any tabular
information in respect of liquidity risk.
Settlement risk primarily refers to the risk that an Authorised Participant or the Currency Transaction Counterparty will default on its contractual
obligations resulting in financial loss.
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12.
Financial Risk Management (continued)
(a)
Credit Risk (continued)
This daily process ensures that eligible collateral (at market fair value) received from the Currency Transaction Counterparty represents at least
100% of the value of the cash paid for the daily repurchase transaction entered into. This eligible collateral is held in accounts with the custodian,
and exists to reduce potential credit risk if the Currency Transaction Counterparty were to default in respect of the Daily Repurchase Transactions
component of the Currency Transactions where, if the Currency Transaction Counterparty defaults on its obligation, the Company may exercise
its rights to realise such eligible collateral. The realised value of the collateral may differ from the amount owed by the Currency Transaction
Counterparty, as prices fluctuate intraday (i.e. from the last point the exposure and eligible collateral were valued).
Eligible
collateral
can
include
cash
invested
in
fixed
income
and
money
market
funds
or
supranational
bonds
with
a
minimum
rating
of
AAA,
G10
and
other
European
government
bonds
with
minimum
rating
of
AA,
US
Agencies
100%
backed
by
the
government,
or
in
eligible
equities
(that
belong
to
specified
indices
that
include
the
major
benchmarks
such
as
S&P
500
and
EURO
STOXX
50,
and
other
developed
market
indices
such
as
NASDAQ
and
STOXX
600).
These
eligible
collateral
rules
apply
strict
margins
and
concentration
limits
to
reduce
the
risk
of
such
a
loss,
but
do
not
completely
remove
it.
Full
details
of
“Eligible
Collateral”
can
be
found
in
the
Eligible
Collateral
Schedule
through
the
Company’s
website.
Eligible
collateral
with
a
market
fair
value
of
USD
194,675,749
was
held
in
custody
as
at
31
December
2024
(2023:
USD
295,886,502)
in
respect
of
the
Daily
Repurchase
Transaction
entered
into
on
that
day
(calculated
in
accordance
with
the
description
above).
The
Currency
Transactions
backed
by
the
collateral
held
in
custody
as
at
31
December
2024
was
USD
194,190,968
(2023:
USD
278,710,950),
disclosed
as
Daily
Repurchase
Transactions
in
note
7.
As
a
result
of
the
collateral
held,
the
Company’s
credit
exposure
to
any
Currency
Transaction
Counterparty
in
respect
of
Currency
Transactions
is
intended
to
be
limited
on
any
day
to
the
aggregate
of
amounts
related
to
Currency
Transactions
not
yet
settled,
amounts
related
to
Currency
Transactions
not
yet
transferred
into
the
Daily
Repurchase
Transactions
and
the
daily
payment
amounts
due
but
not
settled.
Accordingly,
no
impairment
to
reflect
expected
credit
loss
has
been
provided
for.
The
market
fair
value
for
the eligible collateral is calculated on a daily basis (by BoNY) using the most recently available closing bid price.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
12.
Financial Risk Management (continued)
(c) Settlement Risk (continued)
Amounts outstanding in respect of positions yet to settle are disclosed in notes 7 and 8.
(d) Capital Management
(e) Market Risk
i) Price Risk
The primary objective of the Company’s capital management policy is to ensure that it maintains sufficient resources for operational purposes.
The capital being managed is the Stated Capital as presented in the Statement of Changes in Equity. Retained Earnings and the Revaluation
Reserve, as presented in the Statement of Changes in Equity, are not considered managed capital as these balances relate to unrealised gains and
losses on Currency Transactions (held to support the Currency Securities) and Currency Securities, which are reversed on a subsequent
redemption of the Currency Securities and the related cancellation of Currency Transactions and will therefore not be realised. The Company is
not subject to any capital requirements imposed by a regulator and there were no changes in the Company’s approach to capital management
during the year.
The Company’s principal activity is the issue and listing of Currency Securities. These Currency Securities are issued and redeemed as demand
requires. The Company holds a corresponding number of Currency Transactions which matches the total contractual liability of the Currency
Securities issued. ManJer supplies or arranges the supply of all management and administration services to the Company and pays all
management and administration costs of the Company, including trustee and custodian fees. In return for these services the Company pays
ManJer a fee, which under the terms of the service agreement is equal to the aggregate of the Management Fee and creation and redemption
fees earned.
As all Currency Securities in issue are supported by an equivalent number of Currency Transactions held with the Currency Transaction
Counterparty and the running costs of the Company were paid by ManJer, the directors of the Company consider the capital management and
value of its current capital resources are adequate to maintain the ongoing listing and issue of Currency Securities.
Market risk is the risk that changes in market prices (such as index and equity prices, interest rates and foreign exchange rates) will affect the
Company’s income or the value of its financial instruments held or issued.
As described above, Currency Securities provide investors with long or short exposure to the daily foreign exchange performance of developed
and emerging market currencies measured against USD, EUR or GBP. The value of the Company’s liability in respect of the Currency Securities
fluctuates according to the performance of the underlying currency index and the risk of such change in price is managed by the Company by
entering into Currency Transactions with the Currency Transaction Counterparty which match the liability. The obligation of the Company to
holders of the Currency Securities is limited to the net proceeds of the class collateral pool, which comprises rights under the Currency
Transactions and daily repurchase transactions entered into with the Currency Transaction Counterparty. Whilst the Currency Securities are
quoted on the open market, the Company’s ultimate liability relates to its contractual obligations to issue and redeem Currency Securities at set
prices on each trading day. The Company measures the Currency Securities at their fair value in accordance with IFRS 13 rather than at the
Contractual Value (as described in the Prospectus). The gain or loss on the difference between the value of the Currency Transactions and the fair
value of Currency Securities would be reversed on a subsequent redemption of the Currency Securities and cancellation of the corresponding
Currency Transactions. Refer to note 7 for the further details regarding fair values.
The Company therefore bears no residual financial risk on a contractual basis from a change in the value of a currency or currency index by
reference to the futures price. Furthermore, the impact of price sensitivity is considered immaterial to these financial statements.
The directors believe that settlement risk would only be caused by the risk of the Company’s trading counterparty not delivering cash, Currency
Securities or Currency Transactions on the settlement date. The directors feel that this risk is mitigated as a result of the cash or Currency
Securities settling through the CREST system. The system ensures that the transaction does not settle until both parties have fulfilled their
contractual obligations.
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WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
12.
Financial Risk Management (continued)
i) Price Risk (continued)
ii) Interest Rate Risk
iii) Currency Risk
(f) Sensitivity Analysis
IFRS 7 requires disclosure of a sensitivity analysis for each type of market risk to which the Company is exposed to at the reporting date, showing
how profit or loss and equity would have been affected by a reasonably possible change to the relevant risk variable.
The Company’s rights and liability in respect of Currency Transactions and Currency Securities, respectively, relates to its contractual obligations
to issue and redeem Currency Securities at set prices on each trading day. The fair value of each creation and redemption of Currency Securities is
recorded using the price calculated based on the formula set out in the Prospectus. However, under IFRS 13, the liability is recorded at fair value
(being the on-exchange price) which results in a mismatch. As described in note 15 this mismatch is reversed on the redemption of Currency
Securities.
As a result, the Company’s contractual and economic liability in connection with the issue and redemption of Currency Securities is matched by
movements in corresponding Currency Transactions. Whilst sensitivity analysis could be performed on this mismatch, the Company does not
have any net exposure to market price risk. Furthermore the result of the numeric sensitivity is considered not material by, the directors and in
their opinion, no sensitivity analysis is required to be disclosed.
In some cases, movements in exchange rates can be so significant that they lead to the level of a Currency Index for any class falling to zero.
Since leveraged currency indices provide leveraged exposure to daily changes in foreign exchange rates calculated against a base value
determined on the second previous business day, it is possible that in certain highly volatile markets a leveraged currency index may fall to zero
where the foreign exchange rate moves by a large amount over the course of two trading days or even where a particular exchange rate moves by a
very large amount over the course of one day. In these circumstances the collateralised Currency Securities for that class may become subject to
compulsory redemption at a zero price. In such situations, the collateralised Currency Securities may be redeemed for no value and the holder of
the Currency Security will receive no payment on that redemption. Such events have not occurred during the current and prior years.
The Company holds custody accounts with BoNY and this is where the cash received in connection with the issue of Currency Securities and
received under the Currency Transactions is held. The majority of such cash is used to enter into daily repurchase transactions with the Currency
Transaction Counterparty. The pricing of the Currency Transactions or the Currency Securities takes into account the incremental capital
enhancement component of the Currency Security, which includes the impact of interest rates. This incremental capital enhancement component
of the Currency Transactions and Currency Securities is attributable to the security holder. As a result, the Company does not have significant
exposure to interest rate risk.
The Company has exposure to currency risk as the Currency Securities provide investors with long or short exposure to the daily foreign exchange
performance of developed and emerging market currencies measured against USD, EUR or GBP. However, the directors do not consider the
Company to have a significant exposure to currency risk arising from the current economic uncertainties facing a number of countries around the
world as the gains or losses on the liability represented by the Currency Securities are matched economically by corresponding losses or gains
attributable to the Currency Transactions.
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However, there is an inherent risk from the point of view of investors as the values of currencies, and thus the value of the Currency Securities,
may vary widely due to, amongst other things, changing supply and demand for a particular currency, government and monetary policy or
intervention, interest rate levels and global or regional political, economic or financial events. The market price of Currency Securities is (and will
remain) a function of supply and demand amongst investors wishing to buy and sell Currency Securities and the bid or offer spread that the
market makers are willing to quote. This is highlighted further in note 15, and below under the Fair Value Hierarchy.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
12.
Financial Risk Management (continued)
(g) Fair Value Hierarchy
The levels in the hierarchy are defined as follows:
•
Level 1 fair value based on quoted prices in active markets for identical assets.
•
Level 2 fair values based on valuation techniques using observable inputs other than quoted prices.
•
Level 3 fair values based on valuation techniques using inputs that are not based on observable market data.
The categorisation of the Company’s assets and (liabilities) measured at fair value are as shown below:
2024 2023
USD USD
Level 1
Currency Securities
(188,421,086)
(276,157,189)
Level 2
Currency Securities
(7,364,431)
(1,997,426)
Currency Transactions (Daily Payment Amount)
(46,065,063)
(976,295)
(53,429,494)
(2,973,721)
Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement of each
relevant asset/liability.
The Company is required to utilise the available on-market price as the Currency Securities are quoted and traded on the open market. Where the
market on which the Currency Securities prices are quoted is determined to be active at the relevant reporting date, the Currency Securities are
classified as Level 1 financial liabilities. Where the market on which the Currency Securities prices are quoted is determined to be inactive at the
relevant reporting date, the Currency Securities are classified as level 2 financial liabilities. The Company values the Level 2 Currency Securities
using the unadjusted latest traded market price available at each reporting date. This is considered to most appropriately reflect the price at which
transactions would occur as at the reporting date.
The Company’s rights in respect of Currency Transactions relate to its contractual obligations to issue and redeem Currency Securities at set
prices on each trading day. These prices are based on an agreed formula (set out in the Prospectus), and are equal to the published NAVs of each
class of Currency Security. Therefore, Currency Transactions are classified as level 2 financial assets, as the Company’s asset is calculated using
third party pricing sources supported by observable, verifiable inputs.
Fair Value as at 31
December
Fair Value as at 31 December
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www.wisdomtree.eu
The Currency Securities and the Daily Payment Amount component of Currency Transactions are recognised at fair value upon initial recognition
and revalued to fair value in line with the Company’s accounting policy. There are no assets or liabilities classified in level 3.
The Daily Repurchase Transactions component of Currency Transactions totalling USD 240,516,959 (2023: USD 278,710,950) is recognised at
amortised cost, in line with the Company’s accounting policy. The fair value of the Daily Repurchase Transactions is considered to be
approximately equal to its carrying value due to the daily maturity. The collateral consists of level 1 financial instruments.
Transfers between levels are recognised if the primary market on which the Commodity Securities prices are quoted was determined to be inactive
at the relevant reporting date. The Company considers both the last trade date and trading volumes during the 5 trading days leading up to each
reporting date to determine if the market for a particular Commodity Security is active. Transfers as a result of the analysis of the activity levels of
the market are identified and recognised at each reporting date.
The Company considers both the last trade date and trading volumes during the 5 trading days leading up to each reporting date to determine if
the market for a particular Currency Security is active. Transfers as a result of the analysis of the activity levels of the market are identified and
recognised at each reporting date.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
12.
Financial Risk Management (continued)
(g) Fair Value Hierarchy (continued)
13.
Ultimate Controlling Part
14.
Events Occurring After the Reporting Period
15.
Non-GAAP and Non-Statutory Information
The mismatched accounting values are as shown below:
2024 2023
USD USD
Change in Contractual and Fair Value of Currency Transactions
(36,297,242)
4,749,740
Change in Fair Value of Currency Securities
34,324,128
(3,460,026)
(1,973,114)
1,289,714
As at 31 December 2024, Currency Securities with a fair value of USD 6,574,064 (2023: USD 1,312,116) were transferred from Level 1 to
Level 2, and Currency Securities with a fair value of USD 1,039,034 (2023: USD 822,088) were transferred from Level 2 to Level 1.
In accordance with the disclosure requirements of IFRS the directors have determined that no entity meets the definition of immediate parent or
ultimate controlling party. The holder of issued equity shares is HoldCo, a Jersey registered company. WisdomTree, Inc (formerly WisdomTree
Investments, Inc) is the ultimate controlling party of HoldCo.
As a result of the mis-match in the accounting valuation of Currency Transactions (held to support the Currency Securities) and Currency
Securities (as disclosed in notes 7 and 8) the profits and losses and comprehensive income of the Company presented in the Statement of Profit or
Loss and Other Comprehensive Income reflect gains and losses which represent the movement in the cumulative difference between the value of
the Currency Transactions and the price of Currency Securities. The Statement of Changes in Equity also reflects the fair value movements on
both the Currency Transactions (held to support the Currency Securities) and the Currency Securities.
These gains or losses on the difference between the value of the Currency Transactions (held to support the Currency Securities) and the price of
Currency Securities would be reversed on a subsequent redemption of the Currency Securities and cancellation of the corresponding Currency
Transactions. Furthermore, each class of Currency Security is issued under limited recourse arrangements whereby the holders have recourse only
to the relevant Currency Transactions (held to support the Currency Securities) and not to the Currency Transactions of any other class of
Currency Security or to the Company. As a result, the Company does not make gains from trading in the underlying Currency Transactions (held
to support the Currency Securities) and, from a commercial perspective (with the exception of the impact of Management Fees) gains and losses
in respect of Currency Transactions (held to support the Currency Securities) will always be offset by a corresponding loss or gain on the
Currency Securities and the Company does not retain any net gains or losses.
Year ended 31
December
Year ended 31 December
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www.wisdomtree.eu
To reflect the commercial results, the Company has presented below a non-GAAP and non-Statutory Statement of Profit or Loss and Other
Comprehensive Income and Statement of Changes in Equity for the period which reflect an Adjustment from Market Value to Contractual Value
(as set out in the Prospectus) of Currency Securities, together with those gains or losses being transferred to a separate reserve which is deemed
non-distributable.
There have been no significant events that have occurred since the end of the reporting period up to the date of signing the Financial Statements
which would impact on the financial position of the Company disclosed in the Statement of Financial Position as at 31 December 2024 or on the
results and cash flows of the Company for the year ended on that date.
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
15.
Non-GAAP and Non-Statutory Information (continued)
(a) Non-GAAP and Non-Statutory Statement of Profit or Loss and Other Comprehensive Income
2024 2023
USD USD
Income
1,600,712
2,064,922
Expenses
(1,600,712)
(2,064,922)
Result Before Fair Value Movements
-
-
Change in Fair Value of Currency Transactions
(36,297,242)
4,749,740
Change in Fair Value of Currency Securities
34,324,128
(3,460,026)
Profit / (Loss) for the Year
(1,973,114)
1,289,714
Adjusted Result
-
-
- 41 -
www.wisdomtree.eu
Year ended 31
December
Year ended 31 December
Adjustment from Market Value to Contractual Value (as set out in the
Prospectus) of Currency Securities
1,973,114
(1,289,714)
WisdomTree Foreign Exchange Limited
Notes to the Financial Statements (continued)
15.
Non-GAAP and Non-Statutory Information (continued)
(b) Non-GAAP and Non-Statutory Statement of Changes in Equity
USD USD USD USD USD
3 1,781 (750,503) (748,719) 1,784
- 1,289,714 - 1,289,714 1,289,714
Transfer to Revaluation Reserve
- (1,289,714) 1,289,714
-
-
-
- - - (1,289,714)
Balance at 31 December 2023
3 1,781 539,211 540,995 1,784
3 1,781 539,211 540,995 1,784
- (1,973,114) - (1,973,114) (1,973,114)
Transfer to Revaluation Reserve
1,973,114 (1,973,114) - -
Balance at 31 December 2024
3 1,781 (1,433,903) (1,432,119) 1,784
4
This represents the difference between the value of Currency Transactions and the price of Currency Securities
- 42 -
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-
1,973,114
Opening Balance at 1 January 2023
Result and Total Comprehensive Income for
the Year
Adjustment from Market Value
to Contractual Value (as set out
in the Prospectus) of Currency
Securities
Opening Balance at 1 January 2024
Result and Total Comprehensive Expense for
the Year
Adjustment from Market Value
to Contractual Value (as set out
in the Prospectus) of Currency
Securities
-
-
-
Share
Capital
Retained
Earnings
Revaluation
Reserve
4
Total
Equity
Adjusted
Total Equity