Capital MarketsCompliance
February 20, 2020

Margin Bells Will Soon Toll for More Pension Funds

Pension funds need to prepare for margin rules covering the OTC derivatives they use. Corporate pension fund managers may soon have initial-margin responsibilities for the over-the-counter (OTC) derivatives they use to manage those funds, even if their parent companies are exempt. Background. Following the financial crisis, global regulators established variation and initial margin rules for OTC derivatives to provide greater transparency into counterparty risk. Those requirements first became effective in 2016 for financial firms with more than $3 trillion in…
Cash & Working CapitalComplianceTechnology
February 4, 2020

Supply Chain Finance Faces Rising Regulatory Scrutiny

Founder’s Edition, by Joseph Neu Making sense of calls to increase debt classification and disclosure requirements for reverse factoring. I received an email recently from a consultant giving me a heads-up about a potential financial reporting change that could adversely impact the multibillion-dollar market for supply chain finance. Extended payables vs. debt. At issue is the ability of companies to use a financial intermediary to pay suppliers at a discount while extending their payments terms to the suppliers (sometimes in…
ComplianceRegionalSenior ExecutiveTax
January 15, 2020

What China’s Individual Income Tax Changes Mean for Corporates, Expats

CFOs with employees in the country need to plan for new residency rules and ensure compliance. The most significant reform of China’s individual income tax (IIT) laws in 38 years has numerous implications for foreign workers and the multinational corporations that employ them. Michelle Zhou, a partner at KPMG, presented many of the critical elements of the changes to a group of CFOs at a recent NeuGroup meeting in Shanghai. Big picture. CFOs—who are responsible for income reporting—need to proactively…
ComplianceRegionalSenior ExecutiveTaxUncategorized
January 15, 2020

China’s Corporate Social Credit System: What Corporates Need to Know and Do Now

The implications and challenges for corporates facing a new world of ratings. Full implementation of China’s corporate social credit system (SCS) is slated for the end of 2020—a reality with huge implications for multinationals doing business in the country. And that means more work for many CFOs and finance teams. CFOs are often in charge of coordinating the final reporting of data provided by multiple areas of the company and ensuring there is no conflicting information. They’re also responsible for…
Accounting & DisclosureComplianceTreasury Management
January 6, 2020

CECL Important for Nonfinancial Companies, Too

Nonfinancial corporates extending credit must also prepare for CECL. Calendar year companies must apply new accounting for credit losses at the start of the year, in Q1 2020 financial statements, and that includes nonfinancial corporate creditors engaged in a variety of transactions. The Financial Accounting Standards Board’s new current expected credit losses (CECL) methodology replaces the incurred-loss method, which recognizes losses when they become probable. CECL, instead, requires lenders to recognize credit losses expected over the life of a loan…
ComplianceUncategorized
October 9, 2019

Treasury Taking on a Greater Role in Compliance Management

A surprising percentage of companies have no plan in place for monitoring and/or managing regulations, while more of that responsibility has shifted to the treasury function. In its 2019 Compliance Survey, Peachtree City, Ga.-based Strategic Treasurer found that one in three companies has no plan in place for monitoring and/or managing ever-increasing regulations. Among companies that do, the treasury function is increasingly taking on that role in some capacity—over half today, compared to just a third of companies in last…
BankingCompliance
May 2, 2019

Bloomberg Exits KYC and the Market Moves On

Bloomberg Entity Exchange is closing up shop soon, but there are plenty of players out there. Bloomberg confirmed in early April that it plans to shut down Entity Exchange, a know-your-customer (KYC) solution that was supported by Citibank and adopted by multinational corporations including Coca-Cola. Industry insiders say an internal management change led to a review of Bloomberg's product portfolio, with Entity Exchange and the company's sell-side execution and order management solutions businesses getting cut. Bloomberg, they say, was looking…
BankingCapital MarketsComplianceRisk Management
December 17, 2010

Checklist: What You Should Know About ISDAs

Understanding the standard document used to govern over-the-counter derivatives transactions.Based on many discussions with practitioners in NeuGroup peer groups, here is a checklist of things to consider when implementing ISDA Master Agreements (ISDAs). One of the first considerations is whether it is worth bothering to set up an ISDA with every counterparty. Only value-add banks, please. With limited trading capacity to spread around—as well as treasury bandwidth—practitioners agreed that firms should focus on the banks that are able to add…