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Ease-of-use platforms such as Windows 8 offer new ways in which we will interact with work away from the desk.
The European Securities and Markets Authority (ESMA) has published draft rules for the regulation of Over The Counter (OTC) derivatives. The rules impose a general requirement to use cleared instruments and to post highly liquid assets as collateral.
Treasury management has always involved a significant amount of measurement and analysis. This article introduces the concept of treasury key performance indicators (KPIs), which provide a structured and objective environment for assessing the effectiveness, accuracy and rate of improvement of critical treasury processes. Treasury KPIs are valuable at all levels of an organisation, potentially enhancing the quality, level of policy compliance and efficiency of treasury.
On February 24, 2011, the Financial Crimes Enforcement Network (FinCEN) issued a rule amending the Foreign Bank Account Reporting (FBAR) provisions of the Bank Secrecy Act, effective on March 28, 2011. The amendment, as set forth in section 1010.350 of 31 CFR part 1010 states that “Each United States Person having a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country shall report such relationship to the Commissioner of the Internal Revenue for each year in which such relationship exists.” For the 2010 calendar year and beyond, this creates a personal reporting requirement for individuals who exercise approval authority over the foreign bank accounts of their companies, even if they have no financial interest in these accounts. Approval authority is not limited to check signers – it also includes persons authorized to execute electronic payments or send faxed, written or verbal instructions to their banks.
Proposals laid out by José Manuel Barroso, the European Commission president, for a new European financial transaction tax caused much debate last week. Critics have voiced concerns over the detrimental impact it could have on European financial markets, specifically that it could drive business away from the European Union and increase the cost of capital at a time of market stress and uncertainty.
The general picture concerning the cost justification of investments in treasury technology today is that the vast majority of projects are proposed on the basis that they will significantly enhance the quality of corporate governance, through the improved control, security and visibility of cash and financial risks. Treasuries are now mostly regarded as cost centres, whose primary role is to manage financial assets, liabilities and risks.
More than three years after the global financial crisis, its effects continue to reverberate around the world’s financial markets. The emphasis of concern may have shifted from the banking to the sovereign sector, but the underlying issues for corporate treasuries remain the same: quantifying the real creditworthiness of all counterparties, assigning and managing appropriate counterparty dealing limits, and monitoring changes in creditworthiness with the necessary speed and sensitivity so that effective and timely responses to any sudden deteriorations may be made.
The only certainty in today’s financial environment is that conditions remain volatile, and the future uncertain. Volatility tables show how events like the recent Japanese disasters reverberate across the world’s currency markets. With the series of dreadful news announcements recently hitting the wires, the Japanese Yen fell 14% against the US Dollar over the last month.
Enterprise treasuries are found in multinational companies in which there are high-level demands for the real time visibility of cash and risk. This information needs to be available for both periodic and ad hoc reporting on a virtually instantaneous basis, so that the treasurer can feel a high level of confidence in responding to requirements for information across a broad range of operations, financial exposures and risks. In essence, the enterprise treasurer needs to have powerful tools at his or her disposal to provide immediate answers to critical questions such as, 'What is our total exposure to XYZ bank?', 'What is the corporation's present global position in the euro?' and 'What would be the impact on our profit and loss (P/L) if sterling drops another 10% against the dollar?'.
As we approach the second anniversary of the Lehman Brothers’ collapse, treasury continues to enjoy new levels of prominence. Historically, cash management was not regarded as being a particularly interesting element of treasury operations – it was seen as important, of course, but was probably not a high priority activity in the eyes of finance management.