06-04-2022 | treasuryXL | Treasury Delta | LinkedIn | The optimal, objective, and transparent selection of treasury supplier solutions and/or banking services, observing procurement principles and guidelines, remains a complicated challenge for all treasurers. It is extremely time-consuming and cost-ineffective. This article highlights a niche fintech solution developed by Treasury Delta to successfully digitize the […]
05-04-2022 | treasuryXL | Refinitiv | LinkedIn |
In December 2021, LIBOR setting publication ceased on over two dozen settings. But the transition is far from over as phasing out continues for legacy contracts.
For more data-driven insights in your Inbox, subscribe to the Refinitiv Perspectives weekly newsletter.
Since the end of 2021, publication of 24 LIBOR settings has stopped (CHF, EUR, GBP, USD and JPY) and the most used GBP and JPY LIBORS are now being published with a new methodology called “synthetic LIBOR”.
USD LIBORs will continue to be published until mid-2023 using panel bank submissions. Discussions surrounding Euribor are ongoing, but EU regulators appear to be waiting until the LIBOR cessation has fully taken place to define a more detailed agenda for Euribor.
To sum it up – the LIBOR transition is not yet over!
Refinitiv Eikon gives you the information you need – whenever and however you want it
On 16 November 2021, the FCA confirmed Synthetic LIBOR to be allowed for the temporary use of “synthetic” sterling and yen 1M, 3M and 6M LIBOR rates in all legacy LIBOR contracts.
This applied to all other than cleared derivatives, that have not been changed at or before 31 December 2021.
The Synthetic LIBOR are published on existing Refinitiv Instrument Codes (RICS), as shown in Figure 1.
Synthetic LIBOR = ISDA Median Spread + Term Rate.
For example, the JPY 3M Synthetic LIBOR value published on JPY3MFSR= RIC is calculated as per below:
JPY3MFSR=; -0.00020630 = JPY 3M ISDA IBOR Spread (JPY3MFSRS=ISDA ; 0.0000835) + [JPY 3M term rate (JPYTRR3M=QCKJ ; -0.0002938) x (360/365) ; -0.000289775]
*Please note that Refinitiv is an authorised distributor of ISDA spreads. You can find ISDA fallbacks and Term Rates in the Refinitiv Eikon IBOR App.
The main challenge that remains is the USD LIBOR transition. Even with the cessation set to 30 June 2023, market participants have been asked to implement transition and identify fallbacks by regulators.
Even if the use of USD LIBORs has been discouraged and drastically limited for new contracts, data from DTCC and ISDA suggests that LIBOR contracts were traded in January 2022 but in low volumes.
The FCA defined clearly the stipulations in Further Provision and Information in relation to the Prohibition and the Exceptions:
The lack of credit component in SOFR appears to raise some issues, mostly from regional banks, that also stressed the fact that borrowers will struggle with SOFR. LIBOR is a forward-looking term rate and interests are known upfront, with SOFR and other alternative Risk-Free Rates (RFR), interest is compounded and only known at the end of the period.
*Please note that credit-sensitive rates such as Ameribor, AXI or BSBY are available in Refinitiv Eikon but are NOT endorsed by the ARCC or FCA.
On the cash market, the Alternative Reference Rates Committee (ARRC) Progress Report, published on 31 March 2021, estimated there will be approximately $5trn USD LIBOR referencing contracts in business loans, consumer loans, bonds and securitisations maturing after June 2023.
Many of these exposures may have suitable fallback language and will be able to transition away from LIBOR prior to cessation.
ARRC has selected Refinitiv to publish its recommended spread adjustments and spread adjusted rates for cash products. The USD IBOR Cash Fallbacks provide market participants, including lenders and borrowers, with an industry-standard agreed rate, which can clearly and easily be referenced in contracts.
Refinitiv launched USD IBOR Consumer Cash Fallbacks 1-week and 2-month settings on 3 January 2022.
As mentioned in the December 2021 Bank of England Risk-Free Rate Working group newsletter, the transition towards Risk-Free Rates is progressing steadily, as per the charts in Figure 5 for cleared swaps and exchange-traded futures:
In a Risk.net article, Philip Whitehurst, Head of Service Development, Rates at LCH (part of LEG Group) said: “Sterling LIBOR was the most substantial population LCH had converted, amounting to about 185,000 trades for around $15trn worth of cleared swaps. They were converted into Sterling Overnight Index Average (SONIA) equivalents on a compensated basis.
“The same was applicable for around 75,000 yen LIBOR trades, with aggregate notional of about $4.5trn, and 25,000 to 30,000 Swiss LIBOR trades worth about $1.5trn, as well as a very small population of euro LIBOR trades.”
Whitehurst stressed that Euribor trades were not converted.
On the OTC Derivatives markets, the adoption of new Risk-Free Rates is very high.
GBP, CHF and JPY swaps are now exclusively done on new Risk-Free Rates. SOFR swaps are progressing versus LIBOR, at a quite slow pace, and now represent close to 50 percent of the traded notionals, according to ISDA swaps info figures.
Unsurprisingly, the exception remains EUR, where fewer than 30 percent of the traded notionals are on €STR.
Cross-currency swap markets are rapidly ditching legacy interest rate benchmarks in favour of RFRs.
Since the beginning of 2022, trades in euro/dollar cross-currency OTC swaps have almost exclusively referenced the secured overnight financing rate (SOFR) and the euro short-term rate (€STR).
DTCC data repositories from U.S. markets data show how 95 percent of USD / GBP, USD / JPY and USD / CHF now trade RFR versus RFR.
The transition has been pushed by RFR First initiatives, the second phase of SOFR First, launched in September 2021. It stated that interdealer trading conventions for cross-currency basis swaps between USD, JPY, GBP, and CHF LIBORs will move to each currency’s risk-free rates.
Cross-currency swaps prices can be found in Refinitiv Eikon, using the OTC advanced search tool, the OTC Pricer App and the Swap Pricer app, which now allow price cross-currency swaps based on new RFRs.
Although 24 LIBOR settings have already been discontinued, this does not spell the end of the LIBOR transition.
Market participants are still actively transitioning away from LIBOR trades in USD, while getting prepared for other IBORs transitions in the Eurozone and the rest of the world.
Refinitiv Eikon gives you the information you need – whenever and however you want it
31-03-2022 | Pieter de Kiewit | Treasurer Test | LinkedIn |
On a regular basis, we write about your career planning in treasury, our opinions, and observations. Two articles on the website of Treasurer Search that are strongly related to this and very well viewed are:
Also, you might have noticed that we are big fans of the Treasurer Test, which helps treasurers in visualizing their skills and personality.
28-03-2022 | treasuryXL | Gtreasury | LinkedIn |
Modernization is quickly coming to cash forecasting. Corporate treasury teams are accelerating their embrace of new technology strategies and are refining existing methods to introduce greater automation, efficiency, and accuracy. The trend has undoubtedly been spurred by the pandemic, during which treasurers have sought greater access to data in order to optimize cash management – as best they could – during periods of relative uncertainty.
In the recently released Cash Forecasting & Visibility Survey undertaken by treasury analysis firm Strategic Treasurer, nearly 250 professionals from across the global treasury ecosystem weighed in on their current and future state of cash forecasting. The results paint a picture of an industry with an acute demand for faster forecasting and real-time global cash positioning, a growing appetite for emerging AI/ML technology, and plans for heavy spending to realize more rapid and accurate forecasting processes.
The report is worth a read in full, but here are four of the biggest takeaways for treasurers:
The vast majority of treasury teams still use traditional (and very manual) forecasting tools. Ninety-one percent of respondents report using Excel as one of their forecasting tools. In comparison, one-quarter have a treasury management system (TMS) in place, and 28% use ERP systems. Fifteen percent use financial reporting and analysis (FR&A) or budgeting tools to assist in their forecasts, and just 5% use a dedicated forecasting platform.
While Excel is the leading forecasting tool by usage, it clearly lags in making treasurers happy. Fifty-seven percent of those utilizing a TMS or ERP are satisfied with their tooling, while just 42% of Excel users say the same.
Variance analysis is another task requiring heavy manual effort from treasury teams. Fifty-seven percent of respondents say that their variance analysis activities are fully manual, and another 19% report significant manual activities. One-fifth of companies only avoid this manual effort by performing no variance analysis whatsoever. The remaining 5% of respondents utilize variance analysis that’s backed by fully-automated processes.
Fifty-nine percent of treasurers believe that the importance of cash forecasting will increase in 2022, with 27% saying it will become significantly more important. At the same time, nearly half of respondents say they currently have an “extremely difficult” time generating forecasts.
As a result of this unfulfilled need, 35% of treasury and finance departments report plans for extremely heavy spending on technology for treasury systems and cash forecasting capabilities. Forty-one percent plan to focus significant spending on treasury systems in the next year, while 40% plan similarly significant spending on cash forecasting. Additionally, respondents reported heavy technology spending plans that specifically focus on bank account management (33%), reconciliation (28%), payments (28%), and cash reporting (27%).
While just 6% of respondents currently use AI/ML technology to power cash forecasting, their reported plans indicate that within two years that number will reach 27%. Further out than two years, that jumps to 51%.
Respondents also indicate a similarly bright trajectory for regression analysis: 12% use it currently, projected usage will grow to 29% in two years, and 43% use or expect to use it in the future.
Respondents report increasing the frequency of their cash forecasting: 55% now forecast either weekly or daily. Forecasts extend to a more distant time horizon as well, with a plurality of 39% of respondents now looking ahead six months or more, and another 35% forecasting between two and five months out.
Respondents also expressed a greater appetite for cash forecasting than what their current tools and time requirements can feed. If available, 64% of respondents would invest more time to improve the accuracy of their forecasting. Forty-six percent would use extra time to perform variance analysis. One-quarter would increase both the frequency and outlook of their forecasts.
The survey’s findings are beads strung along a common thread: treasury teams recognize and demand the benefits of more efficient and effective cash forecasting. With investments in TMS, ERP, AI/ML, regression analysis tools and more, many treasurers are already pursuing new strategies and spending what it takes to place the strategies and technologies they require at their command.
21-03-2022 | Peter Löbl-Brand | treasuryXL | LinkedIn |
We are happy to interview our newest treasuryXL expert, Peter Löbl-Brand.
Peter has been a corporate treasurer for over 10 years and is also a lecturer for multinational finance and risk management at the University of Applied Science in Wiener Neustadt, Austria.
Peter gathered insights while advising multi-national listed companies as well as local small and medium-sized companies.
He currently lives south of Vienna and is focusing on re-/structuring corporate treasury departments of SMEs.
Visit Peter’s LinkedIn profile to see an overview of his career and activities. But first…
My treasury journey started about 10 years ago as a credit risk manager at RHI AG, now RHI Magnesita. After about 3 years of working in this position, I got the chance to take over the Treasury team as team leader.
It’s a people’s business. Ensuring liquidity and therefore laying the foundation for the operative business of the corporate while having always a close relationship with your capital partner end strengthening their trust in the corporate feels like being one of the most important and highly valued links in the business.
I started my career in the group treasury of a listed company. Stage by stage I developed myself into a full-scale treasury and commercial officer working for a bigger SME company right now. My focus is on small to medium sizes companies with a high need for commercial structuring and the need to set up treasury management from scratch. To build, entertain and lead by example is energizing myself to perform.
Enabling business with partly sanctioned customers and countries.
Maintaining the tension and excitement after more than 10 years in corporate treasury.
Do not trust a soft commitment.
From my understanding, the corporate treasury is a business enabler. Especially when driving business internationally the corporate treasury is able to pilot business relationships to success. Based on that understanding Corporate Treasury is always seeking to find better instruments and the appropriate solution to close a deal.
I expect more and more solutions and instruments acting on the blockchain. Right now the industry is too much focusing on the blockchain as an enabler for cryptocurrency. Using the blockchain in international business will also solve the impossible trilemma as it makes business cheaper, adding quality and reducing costs for all parties.
Get in touch with Peter
Click here for his Expert Profile
Thanks for reading!
Kendra Keydeniers
Director Community & Partners, treasuryXL
14-03-2022 | Jermal McDaniel | treasuryXL | LinkedIn |
We are happy to interview treasuryXL expert, Jermal McDaniel.
Jermal is an accomplished Finance practitioner with over 16 years of Treasury operations and Finance experience.
Jermal is an innovative visionary who utilizes a “Think Tank” methodology to generate ideas and action plans designed to streamline and automate manual processes to facilitate department efficiency.
How did his career in Treasury start and what is his best experience working in Treasury?
My Treasury journey started when my agency recruiting career ended in 2003. I did not set out to be a Treasurer, I kind of found myself in the Treasury field and I am blessed to still be a part of the Treasury Community.
I love the sense of urgency, the attention to detail, and the camaraderie/synergy needed to be a successful Treasury department. I often tell my staff that Treasurers are not born, they are made, and if you are detail-oriented, can work well under pressure, and are timely and accurate, I can give you the rest of the tools to be successful.
My Treasury experience is Mortgage-related. When studying for the CTP it gave me a lot of insight into FX transactions, Short Term liquidity investments, and optimal Debt vs Equity financing philosophies for Firms, but my expertise is in managing all aspects of Treasury including Banking relationships and building well run cross-functional Treasury Teams.
My best experience has been seeing a few of my former employees take the knowledge and guidance that I have given them and parlay that into Sr. Manager and Director of Treasury roles.
Data mining, and consistently getting timely information reconciled and into a useful form for Senior leaders to use for decision making.
You cannot perform all of the Treasury functions on your own and if you do not have a cross-trained Treasury team, there will be a high probability that important transactions will fall through the cracks tarnishing the reputation of your team and the department.
I am excited to see that Firms are really beginning to value what a good Treasury department means to the Firm. As the stewards of the Cash, making sure that there are enough funds to satisfy all of the financial obligations is Paramount to the success and reputation of the Firm.
There is a big push to bring on more Fintech resources to help with recording and reconciling all of the day-to-day cash movements. Treasury Management Systems are helping to streamline cash forecasting and reconciling by becoming a “Single Source of Truth” where information can be accessed by all of the Stakeholders making everyone involved more self-sufficient.
Get in touch with Jermal
Click here for his Expert Profile
Thanks for reading!
Kendra Keydeniers
Director Community & Partners, treasuryXL
09-03-2022 | treasuryXL | Treasurer Test | LinkedIn |
How is your Treasury knowledge? Today we investigate your Treasury Expertise and ask you an example question that you might face when taking the Treasurer Test…
07-03-2022 | treasuryXL | Refinitiv | LinkedIn | Your new home for fixed income
03-03-2022 | treasuryXL | Treasury Delta | LinkedIn | Treasury Delta, our Irish fintech partner, recently formed an alliance with Blokken, a Dubai-based fintech aggregator. This strategic partnership will bring further innovation and digital technology deployment to the corporate treasury ecosystem within the Middle East. Credits: Blokken Source
02-03-2022 | treasuryXL | Gtreasury | LinkedIn |
CHICAGO, Ill. – March 2, 2022 – GTreasury, a treasury and risk management platform provider, today announced its partnership with Infor, a global leader in industry-focused business cloud software solutions. The deal enables GTreasury and Infor customers to benefit from new automation and data integration between GTreasury’s digital treasury platform and Infor’s powerful cloud-based ERP platform. The integrated workflow will help eliminate the challenges of relying on various siloed systems to accomplish business-critical treasury and accounting tasks.
With this partnership, the GTreasury platform will utilize an application programming interface (API) to connect data from Infor’s cloud financials ERP solution, Financials & Supply Management. This data includes bank statements, payments (accounts receivable and accounts payable, along with bank confirmations), Positive Pay automated fraud detection, and general ledger (GL) journal entries that encompass applicable treasury management system sub-ledger entries such as cash, financial instruments, treasury payments and settlements, and hedge accounting.
The integrated data visibility and automated command across applicable balances and transactions give GTreasury and Infor customers the ability to analyze and act on cash positions quickly and confidently. Customers can also access all of the treasury, finance, accounting, and risk management products available through the GTreasury platform.
“Infor continues to build on its well-earned reputation as a modern cloud ERP platform that enables a global and diverse customer base to leverage modern technologies,” said Terry Beadle, Global Head of Corporate Development at GTreasury. “As corporate treasurers and the office of the CFO accelerate digital transformation initiatives throughout their departments, Infor and GTreasury deliver an especially compelling cloud-based solution built to add new connectivity and capabilities. We are proud to partner with Infor and look forward to more organizations discovering the efficiency and performance gains that GTreasury’s complete digital treasury ecosystem delivers.”
“We believe the automation and synergy this partnership provides will enable customers to significantly streamline their treasury and accounting operations,” said Joe Simpson, Vice President of Product Management at Infor. “Organizations will have data visibility and workflow tools to help make business-critical decisions based on their cash positions. We’re excited to provide the transformative capabilities offered by this synergistic collaboration with GTreasury, a leader in providing modern digital treasury solutions to organizations around the world, and to see how customers utilize the benefits of our powerful technologies in tandem.”
About GTreasury
GTreasury is committed to connecting treasury and digital finance operations by providing a world-class SaaS treasury and risk management system and integrated ecosystem where cash, debt, investments and exposures are seamlessly managed within the office of the CFO. GTreasury delivers intelligent insights, while connecting financial value chains and extending workflows to third-party systems, exchanges, portals and services. Headquartered in Chicago, with locations serving EMEA (London) and APAC (Sydney and Manila), GTreasury’s global community includes more than 800 customers and 30+ industries reaching 160+ countries worldwide. Visit GTreasury.com
About Infor
Infor is a global leader in business cloud software specialized by industry. We develop complete solutions for our focus industries, including industrial manufacturing, distribution, healthcare, food & beverage, automotive, aerospace & defense, and high tech. Infor’s mission-critical enterprise applications and services are designed to deliver sustainable operational advantages with security and faster time to value. We are obsessed with delivering successful business outcomes for customers. More than 65,000 organizations in 175+ countries rely on Infor’s 17,000 employees to help achieve their business goals. As a Koch company, our financial strength, ownership structure, and long-term view empower us to foster enduring, mutually beneficial relationships with our customers. Visit www.infor.com.
Join treasuryXL as a partner!
The treasuryXL Partner Program is designed for organizations offering products or services in treasury, cash and risk management.
Newsletter & eBook
Subscribe to our free weekly newsletter and receive your 41 pages ‘easy-to-read’ eBook, What is Treasury?
