Why you need to automate swap execution

22-11-2022 | treasuryXL | Kantox | LinkedIn |

Do you struggle with having a perfect match between your currency hedging position and the cash settlement of the underlying commercial exposure? We’ll let you in on a secret: most treasurers and finance teams do. But how can you simplify this time-consuming and resource-intensive task? In this article, we show why you need to automate swap execution and how you can do it.

We reveal why this is an essential issue for treasurers, how it’s typically handled, and why automated swap execution can help finance teams play a more strategic role in the business. 

Setting the scene

Treasurers know that it is practically impossible to have a perfect match between the firm’s currency hedging position and the cash settlement of the underlying commercial exposure. That’s especially the case if those hedges were taken long before. This is why swapping is so essential.

Let us briefly see an example. If you have a ‘long’ USD forward position with a given value date and you need, say, 10% of that amount in cash right now, a swap agreement allows you to perform that adjustment.

With the ‘near leg’ of the swap, you buy the required amount of USD in the spot market while simultaneously selling —with the ‘far leg’ of the swap— the same amount of USD at the value date of the forward contract. And that’s how you adjust your firm’s hedging position.

Pain points: a resource-intensive activity

Swapping can be extremely time-consuming and resource-intensive, particularly if many transactions, currencies and liquidity providers are involved. We recently saw how a large European food producer was struggling mightily with manual swap execution, a dreadful situation faced by many, if not most, companies.

Among the most common pain points, we can cite the following three:

  • Operational risk. Many tasks are manually executed: retrieving incoming payments, selecting liquidity providers and confirming trades. The entire workflow relies on emails that circulate back and forth with spreadsheets carrying potential data input errors, copy & paste errors, formatting errors, and formula errors.
  • Lack of traceability. Lack of proper traceability hinders the process of assessing hedging performance, as swap legs are manually traced back to the corresponding forward contracts.
  • Risk of unethical behaviour. Understood as the risk that early mistakes that are not immediately reported may lead to severe losses down the road, it is prevalent throughout.

Traceability and automated swap execution

Traceability is when each element along the journey from FX-denominated entry to position to operation to payment has its own unique reference number. But how can we apply this concept to solve the problem of manual swap execution?

The answer is automated swap execution, a solution that is embedded in Currency Management Automation software. It relies on the perfect end-to-end traceability between the different ‘legs’ of a swap agreement and the original forward contract. Meanwhile, FX gains/losses and swap points are automatically calculated. It’s dead simple!

Swap automation is a powerful tool for the treasury team. At the company level, it opens the way to:

  • According to recent surveys, increasing the efficiency of treasury operations is the No. 1 expectation in tech for CFOs.
  • Using more currencies in the business to take advantage of the profit-margin enhancing possibilities of ‘embracing currencies’.
  • Taking a concrete step toward the ‘digital treasury’ is a concern voiced by many CFOs and treasurers.

At a personal level, in terms of the daily workload of members of the treasury team, automated swap execution means:

  • More time to concentrate on high-value-adding tasks such as fine-tuning and improving cash flow forecasts.
  • Reduced stress levels.
  • Increased productivity at work.

And that’s no small achievement! 

What is meant when we read or hear about Volatility?

09-11-2022 | Harry Mills | treasuryXL | LinkedIn

We all have an intuitive feel for what volatility is – we know when a market is exhibiting high or low volatility because we see differences in price changes. But it pays to be more precise with our language and to understand what is meant when we read or hear about volatility.

By Harry Mills


Defining Volatility

Let’s start with a more instinctual and accessible definition:

Volatility is the rate at which prices change from one day to the next. If some currencies or other financial assets routinely exhibit greater daily price changes than others, they are considered more volatile.

Harry Mills, Founder & CEO Oku Markets

In his preeminent book, Option Volatility & Pricing, Sheldon Natenberg refers to volatility as “a measure of the speed of the market,” which is a particularly useful reference point when we consider that volatility and directionality are two different things: an underlying’s price can slowly move in one direction over time with very low volatility, or perhaps it swings wildly from day to day, but over a year it’s not changed much.

Now we have a feel for what volatility is, how do we quantify it? This third definition explains what it actually is: the annualised standard deviation of returns, and Natenberg refers to volatility as “just a trader’s term for standard deviation.”

This isn’t an article on standard deviation per se, but if you’re unaware of what this means then it is a measure of the dispersion of data around the average. Take for example if we measure the height of 1,000 people:

  • If all 1,000 people are exactly 5’7″ then standard deviation is zero
  • If standard deviation is two inches, then we know that 68.2% of people will be between 5’5″ and 5’9″ (see the normal distribution chart below)
Normal Distribution chart (Wikipedia)
Normal Distribution chart (Wikipedia)

What about “annualised” and “returns”?

Volatility is always expressed as an annualised number – this uniformity means that everybody knows what is meant when we talk about volatility being X%. In that sense, it’s rather like interest rates, which are also always described as an annualised figure.

This might not be so immediately useful to a trader or a risk manager, though, who might be thinking of daily or weekly price movements and where their risk or opportunities lie. Volatility is proportional to the square root of time, so to convert annualised volatility into daily, we simply divide the volatility by the square root of the number of days in a year – but we need trading days  on average there are 252, equating to 21 trading days a month. The square root of 252 is 15.87, but most traders approximate this to 16…

Hence, if we have a contract trading at 100 with a standard deviation of 20%, then: 20%/16 = 1.25%. We would therefore expect to see a price change of 1.25% or less for every two days out of three (+/- 1 standard deviation is around 68%).

Returns… I won’t go into detail, but if you want to explore this I would recommend chapter 10.6, The Behaviour of Financial Prices, in Lawrence Glitz’s superb Handbook of Financial Engineering which explains how price returns follow a normal distribution and prices follow a lognormal distribution. I’ll also add that calculating the standard deviation of prices doesn’t provide meaningful information because what we are looking for is the change from one period to the next, so we need to look at the daily returns!

Still here? Ok… let’s take it down a notch and look at the types and uses of volatility

Types of Volatility

There are a few types of volatility that can be measured, but by far the most commonly used and referred to are historical and implied volatility:

  • Historical volatility is a backward-looking measure that shows how volatile an asset has been over say, a 20-day period. It’s useful to look at different time periods and to chart the daily movement in the volatility.
  • Implied volatility is the future expected volatility – the term ‘implied’ is helpful because it literally means the volatility that is implied by the premium of an option contract. It’s a critical factor that influences options prices and draws the attention of traders and risk managers.

Uses of Volatility as an Indicator

Volatility is a common measure of risk, and it is a key component of Value at Risk modelling. But be warned of the ubiquitous disclaimer that past performance is no guarantee of future results.

Historical volatility is useful to understand how an asset or a currency has performed in the past – you can line this up with significant macroeconomic events and understand why there may have been a period of change, and you can get a feel for how the underlying “normally” behaves. For example, trading in the Turkish lira will probably present a higher risk than in, say the Swiss franc.


  • Volatility is the rate at which prices change from one day to the next
  • It demonstrates the “speed of the market” and is different from directionality
  • Technically, volatility is the annualised standard deviation of returns
  • You can approximate daily volatility by dividing the annualised volatility by 16
  • Historical volatility tells us what happened in the past
  • Implied volatility is the expectation of future volatility, and critical to option pricing

Thanks for reading!


Harry Mills

Founder at Oku Markets

Managing Business FX Risk

Optimising cash and liquidity through currency management

31-10-2022 | treasuryXL | Kantox | LinkedIn |

Can you improve cash and liquidity management with the help of more effective currency management? The answer is: yes, you can! In this article, we see how currency management and cash management are, in effect, joined at the hip.

Five important touchpoints

There are at least five crucial, yet sometimes unduly neglected, touchpoints between FX risk management and cash or liquidity management. Let me briefly set the stage first. Then I will discuss their interactions.

(1) Swapping. Adjusting the company’s hedging position to the cash settlement of the underlying commercial exposure requires a lot of swapping.

(2) Collateral. In a world of shifting interest rates, treasurers need solutions that allow them to optimise collateral management.

(3) Working capital management. Solutions to improve working capital and liquidity are rarely mentioned in the context of FX risk management. Yet, they exist!

(4) Netting. Netting allows companies to generate savings in trading costs and in terms of the cash balances needed to satisfy collateral requirements.

(5) Cash flow forecasting. According to a recent survey by HSBC, more than half of treasurers worldwide say that cash flow forecasting is the most important task in treasury.

How and when currency management meets liquidity management

Take the case of a hedging program designed to protect the FX budget rate. It includes stop-loss orders to protect the FX rate used in pricing or a ‘worst-case scenario’ FX rate. It can also include profit-taking orders to lock in more favourable exchange rates.

As long as the stop-loss orders are not hit, hedge execution is postponed. This means that the cash required for collateral requirements can be set aside at a later date. It also means that treasurers have more time to improve their cash flow forecasts.

And it’s not over yet! Hedging incoming firm sales/purchase orders or invoices leads to very precise currency hedging. This means that purchasing managers are in a position to buy confidently in the currency of their suppliers. These, in turn, will be more inclined to grant extended paying terms.

With the perfect end-to-end traceability that comes with automated programs, managers can safely aggregate exposures without fear of losing the benefits of data granularity. This can create more netting opportunities, again reducing the need to set aside cash in terms of collateral.

Finally, swapping can be easily automated.

And voilà!

Feedback effects

That’s how effective FX risk management ends up improving liquidity management. Note that the process feeds on itself. Let me give you an example. Because swap automation releases valuable treasury resources, treasurers can take advantage of the benefits of using more currencies. Automated swap execution, therefore, improves not only the cash management part of the FX workflow but also —indirectly— working capital management.

That’s what I call a win-win situation!

Brush up on your treasury knowledge? Get our eBook: What is Treasury?

27-10-2022 | treasuryXL | LinkedIn |

How can you fast brush up on your treasury expertise, Treasurers, CFOs, Cash Managers, Controllers, and other Finance Addicts? Or how would you describe “What Treasury is” to family and friends? Well, there is an easy solution for it. Download our free eBook here: What is Treasury?

This eBook compiled by treasury describers all aspects of the treasury function. This comprehensive book covers relevant topics such as Treasury, Corporate Finance, Cash Management, Risk Management, Working Capital Management.

This eBook was prepared by treasuryXL based on the most useful best practices offered by Treasury professionals throughout the previous years. We compiled the most crucial information for you and wrote clear, concise articles about the key topics in the World of Treasury.

We took a deeper dive into each of the above-mentioned treasury functions and highlight:

  • The purpose of each named Treasury function (What is?)
  • What specialists do
  • Examples of Activities
  • Summary of Frequently Asked Questions and answers
  • Conclusion

How to receive the eBook ‘What is Treasury’ for Free?

We simply giveaway two presents for you! By signing up for our newsletter you will automatically receive the following in your inbox:

  1. On Fridays, our Coffee Break weekly newsletter will land in your inbox. In this weekly newsletter, we will highlight the whole week full of the latest treasury news within our community.
  2. The 41 pages eBook, What is Treasury?


Subscribe, Join, Download and Relax.

Welcome to our community and have fun reading!



Director, Community & Partners at treasuryXL



Types of Forward Contract

20-10-2022 | Harry Mills | treasuryXL | LinkedIn

A forward contract is an agreement to buy or sell one currency for another at an agreed rate and at an agreed future date. Forwards are traded over the counter, meaning they are not traded on a central exchange; instead, they are privately negotiated, legally binding agreements between two parties, typically a bank or broker and its client.

By Harry Mills


Types of forward contract

For businesses, forward contracts provide a mechanism to secure exchange rates for future exposures and minimise the impact of currency fluctuations and market volatility. Forwards are favoured by treasurers and FDs/CFOs for their simplicity, availability, flexibility, and certainty they provide.

The exchange rate on a Forward is typically higher or lower than the spot rate – this is due to the interest rate differential of the two currencies involved. Read more in my blog post on forward pricing for more information!


The Benefits of Forward Contracts

The decision to hedge or not is unique to each business and its situation. If currency hedging is appropriate and would help a business to reduce risk and achieve its objectives, then forward contracts will likely play an important role in the strategy:


  • Certainty – Guarantee the exchange rate for future payments or receipts
  • Predictability – Securing future conversion rates makes cash flows predictable
  • Flexibility – Some contracts can be used at any time before the maturity date
  • Simplicity – Trade quickly online, in any size, and in most currencies

Types of Forward Contract

The basics apply to all contracts – a set amount, rate, and future maturity date, but there are three main types of contracts to be aware of:

  1. Fixed: Settlement is restricted to one future date only
  2. Open: Fully flexible, allowing settlement at any time up to the maturity date
  3. Window: Can be utilised within a window of time up to the maturity date

The open forward gives the most flexibility for drawdowns and utilisation, but it can come at a price: The reason that three types of contract are available is that the forward rate is influenced heavily by the length of the contract and the size and sign (positive or negative) of the interest rate differential of the two currencies involved. There could be a benefit to a business in selecting a fixed or window forward contract, rather than a fully flexible, open contract.

A quick example:

  • An Irish company imports from China in USD (so they sell EUR to buy USD)
  • They have an invoice of $500K to pay in 6 months’ time
  • The spot rate is EUR/USD 1.0000, and the 6m swap points are +0.0120
  • Open Forward exchange rate is quoted at 1.0000, $500K costs €500,000
  • Fixed Forward exchange rate is quoted at 1.0120, $500K costs €494,071


If in doubt, you should speak to your FX provider about forward pricing and which solution would be best for your needs, balancing flexibility and market pricing.

What to look for from your FX provider

Your currency provider should provide you with clear and consistent pricing for forward contracts. They should give you transparent and honest guidance as to the pros and cons of each contract type, and allow you transact how you want, whether that’s over the phone or online.

It’s common for FX brokers to overcharge or “keep” forward points to increase spreads (their margins), so ask for a fixed pricing schedule which includes transparency on forward points.

Open Fwd-va9lk

Window Fwd-tw7b7

Forward with Oku Markets

Oku Markets provides live forward contract trading to clients online and via our telephone dealing desk. We always give our customers fixed, consistent, fair, and transparent FX prices, so you can trust us to work with you, not against you!

Contact us at @[email protected]ts.com   or 0203 838 0250 to discuss your needs!

Here’s a quick video of our online platform showing the few clicks to trade:

Thanks for reading 👋


Harry Mills

Founder at Oku Markets

Managing Business FX Risk

BNP Paribas signs an agreement for the acquisition of Kantox

17-10-2022 | treasuryXL | Kantox | LinkedIn |

treasuryXL congratulates highly valued partner Kantox with the announcement that BNP Paribas has signed an agreement to acquire the leading fintech for automation of currency risk management!


Kantox, a leading fintech for automation of currency risk management, will accelerate its growth with the support of BNP Paribas and the strengths of its integrated business model. This acquisition builds on the initial strategic partnership between BNP Paribas and Kantox initiated in September 2019.

BNP Paribas is pleased to announce the signature of an agreement for the acquisition of Kantox, a leading fintech for the automation of currency risk management. Kantox’s software solution has managed to successfully re-bundle the Corporate FX workflow, offering a one-stop-shop, API-driven, plug-and-play solution which has emerged as a unique technology within the B2B cross-border payments sector. Kantox’s technology provides an unrivalled level of automation and sophistication to Corporates in setting up hedging strategies.

By leveraging its integrated business model, BNP Paribas is well-positioned to accelerate and extend Kantox’s offering to a wide range of Corporate clients across the globe.

The acquisition of Kantox is supported by the Global Markets business of BNP Paribas’ CIB division and the business centres of the Commercial, Personal and Banking Services (CPBS) division. The two divisions aim to deploy Kantox technology to large corporates as well as SMEs and Mid-Cap clients, capitalising on market knowledge and the local presence of the group.


This acquisition illustrates BNP Paribas’ Growth Technology Sustainability 2025 plan that sets out to accelerate the development of technological innovations, enhance customer experience and provide best-in-class capabilities to its clients.

Philippe Gelis, CEO and co-founder at Kantox: “We have been serving clients together since 2019 when our technology partnership started. During those 3 years, we spent a lot of time together in the field, getting the opportunity to understand that together we were stronger and able to bring more value to clients. It is the best of both worlds, the leading software company in the currency management automation category and the leading bank in Europe.”

Olivier Osty, Head of Global Markets, BNP Paribas CIB: “We are delighted to strengthen our partnership with Kantox, which brings to our clients a unique and innovative platform to automate their currency risk management. Corporate treasurers are currently navigating turbulent markets, and advanced technology can help mitigate some of the challenges, easing the burden of manual tasks and allowing them to focus on their core business.” 

Yann Gérardin, Chief Operating Officer, Head of BNP Paribas CIB: “The acquisition of Kantox presents a further illustration of our ability to establish long-term partnerships with fintechs in an ever-increasing range of areas. Supporting our clients in their international development and providing them with the most advanced technological solutions have always been our priority and are, as such key pillars of our GTS 2025 strategic plan.”

Thierry Laborde, Chief Operating Officer, Head of BNP Paribas CPBS: “This acquisition demonstrates how our distinctive model and integrated platform strategy are able to create value and develop business opportunities. Our leading positions with European companies of all sizes will enable Kantox to further accelerate its development while improving our customers’ experience.”

The acquisition is subject to regulatory approvals and is expected to complete in the coming months.

Eurofinance remains THE event for corporate treasurers | By Pieter de Kiewit

12-10-2022  treasuryXL | Pieter de Kiewit | Treasurer Search  LinkedIn


Throughout covid times the organizers of Eurofinance remained active and were able to create interesting web-based events. Still, general opinion in last weeks’ event in Vienna was that there is nothing like the live thing. The programme was packed with interesting content, the event floor with interesting companies and visitors.

By Pieter de Kiewit

Communication leading up to the event and the venue, the Wien Messe, radiated experience in events of this size. The numbers of representatives and visitors were impressive. Luckily, the venue is big enough to not nerve the visitors who have to get used to large crowds again.

The programme was spread out over the very large room for plenary meetings, five large rooms for parallel session with presentations & panel discussions and “open rooms” on the trade floor. Key note speakers like Guy Verhofstadt and Goran Carstedt were able to enthuse with stories beyond the scope of treasury, others covered topics about treasury technology, both practical & visionary and treasury organization, for example about my personal favourite, the treasury labour market.

For many, the trade floor was easily as interesting as the content. Visitors gained market information, for example preparing for a TMS selection and implementation. Also reuniting with old treasury friends and getting to know new ones, was relatively easy during well catered breaks. Some of the visitors created new legends during the Thursday night afterparty that is not covered by this looking-back-blog.

As treasuryXL ambassador I visited the various partners of the platform present and received positive feedback on the event. So Cobase, Kyriba, TIS, CashForce, Nomentia, Refinitiv and CashAnalytics, we hope to see you again in Barcelona again and welcome a number of new ones.


Hasta luego,







Thanks for reading!

Pieter de Kiewit



LIVE SESSION | My Treasury Career Development & How the Register Treasurer education contributed

29-09-2022  treasuryXL | Treasurer SearchLinkedIn


Are you thinking about how you can shape your treasury career and in need for inspiration? There are plenty of education opportunities, but in what education will you invest?



You are invited to join our next Live Session. Registration is Now Open for:

𝐌𝐲 𝐭𝐫𝐞𝐚𝐬𝐮𝐫𝐲 𝐜𝐚𝐫𝐞𝐞𝐫 𝐝𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭 & 𝐇𝐨𝐰 𝐭𝐡𝐞 𝐑𝐞𝐠𝐢𝐬𝐭𝐞𝐫 𝐓𝐫𝐞𝐚𝐬𝐮𝐫𝐞𝐫 𝐄𝐝𝐮𝐜𝐚𝐭𝐢𝐨𝐧 𝐂𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐞𝐝

There is no standard career path for treasurers but one can learn from the choices and developments of the successful ones.

In this webinar two graduated Register Treasurers will share their stories:

  • 🌟 Jurgen Wessel RT is interim Head of Treasury of SHV and has experience in a variety of international companies at HQ and treasury hub level.
  • 🌟 Frank van der Hoeven RT van der Hoeven used to be a banker, moved to the corporate side and currently is Treasury Manager at IMCD, well-known for many successful acquisition and integration processes.

They will tell you about how they moved between various stations and will pay special attention to the added value of their post academic degree: The Treasury Management and Corporate Finance programme (RT Programme) at the Vrije Universiteit Amsterdam (VU Amsterdam).



Everyone is welcome to this webinar. This webinar is extra relevant for those who consider joining the RT programme.

🌟Moderator: Pieter de Kiewit of Treasurer Search

🌟Duration: 45 minutes


We can’t wait to welcome you next week!

Best regards,



Kendra Keydeniers

Director, Community & Partners





Download Kantox’s Budget Hedging Report

28-09-2022 | treasuryXL | Kantox | LinkedIn |

Are you a CFO or Treasurer drafting your upcoming budget? Find out how to set, defend and outperform your budget rate in Kantox’s exclusive new report.

Based on real industry insights, you can learn:

🔹 The best way to set a budget rate

🔹 How to delay hedge execution while reducing forecast risk

🔹 How to improve your budgeted profit margins

🔹 Top solutions to automate time-consuming processes

👉 Get your report here

CurrencyCast Season 3 is live!

27-09-2022 | treasuryXL | Kantox | LinkedIn |

Season 3 of Kantox’s #CurrencyCast is live! In the first episode, they examine companies that manage their FX risk via spreadsheets and how they may be exposing their business to a whole other type of danger, spreadsheet risk.

Agustin Mackinlay breaks down the dangers and pitfalls of spreadsheet risk and how it can slowly erode your FX risk management processes.

He walks us through:

🔹 What is spreadsheet risk?

🔹 How to recognise this type of risk

🔹 Where it can arise in the currency management process

🔹 How to manage and eliminate spreadsheet risk

It’s an FX masterclass, all in under 10 minutes.

👉 Watch the episode and read Kantox’s key takeaways here