International Treasurer: Monthly Articles

A Smart Web-based Derivative Solution

Tue, 15 May 2012 19:06:55 GMT

By Geralyn Frances

Canadian company FINCAD helps companies reduce the burdens and risks created by hedge accounting.

Since Enron, companies have dealt with stricter valuation rules for derivatives, including hedge effectiveness and the accounting treatment of financial transactions. Accountability for derivative instruments certainly is not new, but rule modifications and changing standards require practitioners to pay more attention. For the treasury groups still inundated with spreadsheets or otherwise manually calculating hedge relationships, there is a smarter and easier solution.

Supply Chain Finance Gaining Favor Again

Tue, 15 May 2012 19:06:02 GMT

By Geri Westphal

New regulatory frameworks are giving supply chain finance a higher profile.

Large global multinational companies continue to review and improve their strategies for managing working capital and seek new ways to more efficiently manage the flow of funds through the entire supply chain.

Spreading the Word on CDS Spreads

Tue, 15 May 2012 19:04:58 GMT

By Anne Friberg and Mary Ann Dowling

Members of The NeuGroup’s FX Managers’ Peer Groups tinker with counterparty assessment models to find a proper role for CDS spreads in the analysis.

During the financial crisis, companies sought alternatives to credit ratings to assess the counterparty risk of their banks. The idea was that agency ratings aren’t forward-looking enough and don’t give the whole picture of the financial health of any given institution. After all, Lehman Brothers had an A rating before imploding; meanwhile its CDS spreads were through the roof. Since then, CDS spreads have emerged as a metric used in various models for risk assessment, and increasingly monitored and incorporated as early-warning signals to supplement old-fashioned credit ratings. The question is, how can companies make the most appropriate use of this metric?

Keeping Treasury’s Ground Game Sound

Tue, 15 May 2012 19:00:44 GMT

By Joseph Neu

Treasurers should remind themselves frequently that their treasuries have a principal duty to support their firm’s business units—all the way down to the local level. It is too easy to get caught up in the benefits of centralization and forget that some of the most important support treasury can provide is on the ground.

Treasury’s “Big Data” Challenge

Tue, 15 May 2012 18:59:52 GMT

By Dwight Cass

Pricing and risk management activities require ever-more market data, forcing corporates to address the same big data challenges financial institutions face.

What type of business increased its spending on financial market data the most last year? The question brings to mind the endless rows of computers stuffed into northern New Jersey technology centers that execute algorithmic equity and derivatives trades for banks and hedge funds. But neither prop traders nor buy-side quants boosted their data spending as much as treasury and FX.