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Talking Shop

FXRisk ManagementTalking Shop
September 9, 2021

Talking Shop: Measuring Counterparty Exposure on Outstanding Trades

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Member question: “For companies that trade derivatives on a non-collateralized basis, how do you measure your exposure to counterparties on outstanding trades (e.g., impact from one standard deviation movement?) and how is this factored into your overall counterparty risk assessment? “We are currently looking to move away from collateral postings on our…
Justin Jones
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FXTalking Shop
August 19, 2021

Talking Shop: Approval Level For Executing Hedging Contracts

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Member question: “I know we talked about this at some point this year, but I wanted to see if you all would help me benchmark. What level of approval/review/sign-off is required prior to executing your hedging contracts?” Peer answer 1: “Our treasurer signs off on each monthly tranche of cash flow hedges…
Justin Jones
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FXTalking Shop
August 12, 2021

Talking Shop: Digging Into Dual-Purpose Hedges and De-designation

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Member question: “Does anyone have dual-purpose hedges (for example, the hedge is originally a cash flow (CF) hedge and then intentionally de-designated to become a balance sheet hedge, with impact after de-designation going to the P&L)?”Peer answer 1: “Yes, we’ve recently switched to a long haul approach and are now de-designating our…
Justin Jones
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Talking Shop
August 5, 2021

Talking Shop: Debating Soft Tokens for Online Banking Access

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Member question: “Do you allow soft/mobile tokens for online banking access instead of physical tokens? If so, do you limit it to personnel with company-issued cell phones? “Did your IT team have any concerns with allowing soft/mobile tokens?” Peer answer 1: “We currently only issue physical tokens, but we are having the…
Justin Jones
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Risk ManagementTalking Shop
July 22, 2021

Talking Shop: Interviewing Management to Uncover Risks

Member question: “Has anyone, recently or in the past, conducted broad wide-scale open-ended (i.e., not scripted Q&A) risk interviews of top management and leaders as the primary means to collect risk-identification inputs? “I am looking to share thoughts and experiences regarding the effectiveness, as well as methods to summarize, quantify and present the key findings.“I have interviewed board members, executive staff, management VPs+, totaling in the range of 75-100 one-on-one discussions. I am seeking recommendations on the process.” Peer answer…
Antony Michels
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BankingInvestment ManagementTalking Shop
July 15, 2021

Talking Shop: Investing in Collateralized Loan Obligations

Member question: “Have any members considered/evaluated adding to their investment portfolio in the current environment? “While we’ve had CLOs in the portfolio in the past, it’s something that hasn’t been actively pursued in recent years and we are dusting it off for evaluation.” Peer answer 1: “We have been investing in CLOs since Q2, almost exclusively in the AAA space, but we have authorization to do AA. Spreads are tight, but they are a good option to park cash and…
Justin Jones
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FXTalking Shop
June 24, 2021

Talking Shop: Allocating Transaction FX Impacts

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Member question: “As it relates to the reporting of transaction FX impacts (revaluation of non-functional currency monetary assets and liabilities—cash, AR, AP, etc.), does your company allocate these impacts to the business or is that impact kept at corporate?”Peer answer: “We’ve discussed this a lot recently. Historically, the FX gain/loss is kept…
Justin Jones
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RegionalTalking Shop
June 10, 2021

Talking Shop: Reducing Impact of Negative Interest Rates in Europe

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Member Question: “What solutions are available to reduce the impact of negative interest rates in the eurozone? “Our bank there charges 1% on euro deposits. We have cash pooling, but converting to USD daily seems like a pain.” Peer answer 1: “Our global bank charges us 0.5% at the moment, but…
Justin Jones
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FXTalking Shop
May 27, 2021

Talking Shop: The Calendar, the Clock and FX Accounting Rates

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Member question: “When do you set your monthly accounting FX rates? Our fiscal month always ends on Friday, end of day. We set our month-end rates on Thursday at 5 p.m. EST. Alternatives include: “Setting FX rates on Friday morning, but intraday historical data is limited in time, which limits auditability.“Setting FX…
Justin Jones
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Risk ManagementTalking Shop
May 13, 2021

Talking Shop: Cash Exposure in Counterparty Risk Assessment

Editor’s note: NeuGroup’s online communities give members another forum to find answers to their questions. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Member question: “In counterparty risk assessment models, related to cash in bank accounts, do teams typically manage cash exposure using a percentage of the total or fixed dollar limits (or both)? If dollar-based, how are limits defined (and how much flexibility is employed)?”Peer answer 1: “We set deposit limits with our…
Justin Jones
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