The ACT Treasury Forum

Powered by HSBC, it has been an exclusive invitation-only event run the 14 November, on the afternoon of the ACT Annual Dinner for several years. Context of course is everything. A contemporary treasurer needs an understanding of a full range of issues such as business strategy, geo-politics, technology (and not solely in a narrow treasury sense) and regulation. All that on top of the day job, the operational demands of today’s treasury responsibilities.

 

Opening the day from HSBC, Dom Bunning (Snr FX Specialist) and Doug Lippoldt (Chief Trade Economist) gave delegates a sense of the context in which international business is operating. HSBC’s view is that global growth is soft with particular concerns over the EuroZone, the US Dollar is likely to appreciate (with $/£ as low as 1.10 if there’s a negative Brexit) and although the trend in emerging markets is positive (despite some currency issues) many remain on the periphery of global economic trade.

A panel session followed on ‘treasury in the digital age’. The focus was less about treasury itself rather a guide for treasurers on how to assess the drivers of technology change (reducing costs? centralising decision making?), which changes in technology are industry disruptive (data mining, private blockchains) and which steps on the way (mobile banking) and what does change mean for an individual’s skill set and capability (communication remains key). Technology may just be a tool but has the power not solely to affect business processes but equally personal relationships (especially within organisations), intellectual property and access to information.  

The mid afternoon session saw delegates able to choose between 5 working group roundtables.

 

  • The cash management working group looked at virtual banking, cash pooling and centralisation of cash management. A new world of liquidity and account data at our fingertips – what will treasurers do with the detail?  Delegates confirmed very little take up of virtual accounts (VAs) but recognition that changes in bank capital allocations from financial regulation will drive VA usage.
     

  • Regulation and compliance was the theme for another group. The most immediate issues are the end of LIBOR (not welcomed by all it’s safe to say!), the impact of Brexit and the continuing noise around financial market regulations (e.g. KYC, EMIR, the FX Global Code, the UK Money Markets Code).  The ACT’s own research has shown treasurers to accept regulation as a necessary evil but some wonder whether it’s been really worth the effort. 
     

  • A payments group wrestled with the impacts of technology and regulation, not just in the EU with PSD2 but globally with SWIFT gpi and a whole host of tech players helping consumers and businesses move funds around the financial system with the benefits focusing on increased security (and less payment fraud), greater transparency of payments and instant payment settlement.  
     

  • Treasurers continue to have primary responsibilities for funding and financial risk management. Recent surveys by HSBC and the ACT have confirmed that risk management is a key priority for treasurers and CFOs in organisations of all sizes. In contrast, funding for investment grade corporates has been plentiful and cheap for several years. Delegates agreed that a sensible treasurer ought to look at widening their funding sources, more frequently review risk management policies (to take in business not just financial risks) and keep up to date with regulation affecting bank liquidity and credit appetite.
     

  • The corollary to improved cash and liquidity information is that where surpluses are available treasurers must manage cash as an asset. Delegates considered both traditional cash investing but also investing in sustainable supply chains as well as cashing up shareholder returns with buybacks or dividends. 
     

The last plenary session of the day was a panel debate on the role treasury can play in the battle against cyber threats (and tech failure) to an organisation. The key takeaway for delegates was that they should spend much more time on collaboration and sharing experiences (good and painful) with other treasurers, with regulators, with government crime and fraud agencies and with police and security services. 

In closing, ACT assistant director, Policy and Technical, Michelle Price highlighted the range and volume of issues today’s treasurers must address. The key message? Work ever closer with your colleagues, your advisors and support organisations to deliver solutions and strategic responses.

Peter Matza

ACT