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Why might you use a market order?
09-09-2021 | treasuryXL | XE |
If you’re making a payment in a volatile market and aren’t operating under a deadline, you may want to consider a market order for your next money transfer.
If you need to send money overseas, sending it on the spot and crossing your fingers for a good rate isn’t your only option. (Thank goodness!) There are several ways to get the most out of your foreign exchange transfers, whether you’re hoping to get it done by a certain date or get the best possible rate. One of such is the market order, and it’s available to everyone. But what exactly is a market order and how does it work?
What is a market order?
Remember how we described forward contracts as the “buy now, pay later” transfer option? Market orders would be the “buy now, transfer later” option.
When you make a market order, you can specify your target rate at which you’d like to exchange your currencies. The current rate doesn’t matter: the markets are constantly moving, and you’ll never know when your desired rate will be live.
After you’ve placed your market order and set your target rate, your work is done, and now it’s up to the markets. Once your rate is live, your currency will automatically be purchased, allowing you to transfer currency at your ideal rate.
Why use a market order?
The foreign exchange market is volatile and unpredictable. Nonetheless, you can monitor the market and come up with a clear-cut currency strategy that allows you to get the most out of your foreign exchange transactions, without having to constantly check the rates.
With a market order, you can easily set an exchange rate you want for your currency and once your target is met, the transaction is initiated automatically. This gives you the opportunity to get the highest value for your currency regardless of how volatile the market is.
Key things to note about a market order
It allows you to customize your market order by setting the amount, exchange currency, value date, and validity.
You can choose a desired target exchange rate to either stop-loss, make -profit, or get the best of both.
Your market order triggers automatically once your target rate is reached.
Since the process is automated, you’re not required to keep monitoring the market for the best rates.
You can sit back and relax without bothering about the volatile nature of the foreign exchange market!
A market order allows you to get the best out of sending money at your most preferred exchange rate and to prevent the undesirable effects of the unstable foreign exchange market. Once you set a market order, the online money transfer platform such as Xe monitors the foreign exchange rate movement, automates and completes the transfer on your behalf once the set rate is reached.
It’s an opportunity for you to benefit from an automated foreign exchange management system with minimal exchange rate risks.
When should you use a market order?
You can use money order just about any time you want. However, certain situations make a money order the preferred choice for sending money. Here are the most preferred periods to use a money order:
To get the best of higher rates
To save money and time
To make the most of foreign exchange purchase
To create a safety net
To get the most out of your budget
To take advantage of favorable exchange rate
To manage foreign exchange risk
Depending on the currencies you want to transfer and what’s going on in the world at the time, your currencies could be subject to quite a bit of volatility. If you’re contending with frequent market motion, setting up a market order can help you to ensure that you’ll be able to make your transfer at the best possible rate, whenever that may be.
Market orders are also a great option for transfers that aren’t time-sensitive. Some transfers (such as bills or educational payments) need to be made by a certain date, but if your transfer doesn’t come with its own hard deadline, you can take advantage of market orders to make the most of your money in your transfer.
Why should you take note of currency risk management?
Managing the risks associated with the volatile nature of the foreign exchange market is important to get the best rates for your money transfer. This is one of the key reasons why the market order is such a good option. Here are key reasons why you should consider currency risk management using a market order:
All your foreign transfers will be based on strategic decisions.
You’ll be able to forecast your international expenses.
You’ll know precisely what foreign exchange range will be used for your transfer.
You’re not required to keep monitoring the market to get the best rates.
Market order is automated so you aren’t bothered about missing the best rates.
You can use the volatile nature of the market to your advantage.
Is a market order the best option if your transfer is date-focused?
No.
Unlike several other available money transfer methods, a market order isn’t the best option if you intend to transfer your money within a specific date. That’s if your money transfer has a deadline.
For example, some payments such as overseas mortgage, school fee or an emergency medical bill require payment within a specific period. Once you miss such a deadline, you’ll have to deal with the consequences that follow.
In such situations, a market order isn’t the best method for transferring your money. However, if your transfer doesn’t require any deadline or specific dates, a market order could be your best bet. Market orders are mostly suitable for money transfers that aren’t time-sensitive. It provides a perfect opportunity to sit back and wait for the best market rates before your transfer goes through.
How do I create a market order?
Ready to set up a market order? It’s no more complicated than sending any other money transfer. If you don’t have an account, take just a few minutes and sign up for your free account first. If you’re already registered, visit our Money Transfers page to learn more about how you can get started.
Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you the detailed information.
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Nomentia Acquires TIPCO: A union of exceptional products and teams
08-09-2021 | treasuryXL | Nomentia |
Nomentia announced yesterday that the company has acquired TIPCO Treasury & Technology. Shortly after the news was released, we had the chance to sit down with Jukka Sallinen, CEO of Nomentia, and talk about the announcement, what does the acquisition promise for finance and treasury professionals globally, and what does the future hold for Nomentia.
The acquisition of TIPCO is the latest milestone in Nomentia’s history. What’s the reason behind the transaction?
There are a couple of reasons. First and foremost, we’ve felt that both companies share a very similar mission. We want to provide unparalleled solutions for and with our customers. TIPCO’s Treasury Information Platform (TIP) is an exceptional treasury management solution that is widely known in the DACH region, and TIPCO has been also famous for its acumen in treasury. Our combined solutions and domain expertise make us one of the strongest players in the cloud treasury and cash management space. I have no doubt that our current and future customers will benefit from our combined product portfolio. Another good reason for joining forces with TIPCO is that we’ve strongly felt that both companies have had surprisingly similar cultures – both have a very healthy obsession for providing the best solutions for our clients and we take pride in what we do.
Tell us more about the merged product portfolio and how treasury teams will benefit from it?
Before the acquisition, Nomentia cash management was consisting of Bank connections, Payments, Cash Forecasting, In-house banking, Bank Account Management, and Reconciliation solutions. Adding TIP to the solution mix, we can now provide robust and sophisticated cash flow forecast and cash visibility solutions, as well as solutions for trade finance, FX risk, treasury reporting and treasury workflows, and more. TIP has been always loved by the users and now all Nomentia customers will have access to TIP.
Today, it’s not feasible for treasury teams and finance teams to choose one provider for all their needs or trust that their ERP system would provide a working solution alone. Treasurers should be able to choose the solutions that can best resolve their challenges and meet their needs. To get the best outcome, finance and treasury teams often need to work with multiple vendors – taking the best solution from each. Of course, that’s not always ideal from IT’s point of view, but that’s where our team comes in to take care of the implementation plan together with the client and integrate with their existing systems and banks. We trust that a lot of our current customers will find new solutions from our updated offering that can help them to overcome their current challenges.
New customers will find that Nomentia can offer the widest cash and treasury management solution portfolio on the market to help them build better treasury processes.
How does the acquisition affect Nomentia’s future?
During the past year, Nomentia has taken big steps toward becoming the global powerhouse for treasury and cash management. After last year’s merger of OpusCapita and Analyste, we’ve successfully got our footprint in many new markets, and we’ve been especially growing in the DACH and Benelux regions besides continuing to be the number one choice of treasurers in the Nordics. Acquiring TIPCO and merging the two product portfolios will help us to strengthen our position in Europe even more.
Our team has been also growing significantly – it’s always great to work with people that are experts in their field and can truly help our customers to develop their operations. Together, we will exceed our customers’ expectations with our strong product portfolio and even stronger team. Personally, I am thrilled about the news and can’t wait to roll up our sleeves and get to work together with our new colleagues!
Read the press release to learn more
Spreadsheet risk: the silent killer of FX performance
07-09-2021 | treasuryXL | Kantox
Imagine a perfectly designed currency hedging program for a company that seeks to protect its annual budget. Given the specific features of that company —especially its pricing dynamics— such a program would allow the finance team to systematically achieve a hedge rate that would be equal or better than the FX budget rate, avoiding overhedging all the while. The hedging strategy would also consider the firm’s degree of forecast accuracy, as well as the forward discount or premium of the currencies in which it trades.
Now imagine that this optimal FX hedging program was implemented on perfectly designed spreadsheets. Armed with super-efficient spreadsheets, the finance team would project forecasted revenues and expenditures, calculate the firm’s exposure to currency risk and set a time frame for the execution of hedges.
A treasurer’s dream come true? Not so fast.
Any reasonably well-designed currency hedging program goes through a process in three phases: the pre-trade phase, the trade phase and the post-trade phase. Each of these phases, in turn, comprises several intricate steps. And here’s where a wholly unexpected risk would sneak in, with potentially devastating consequences: spreadsheet risk, the silent killer of performance.
Spreadsheet risk is omnipresent
Spreadsheet risk comprises a series of errors stemming mostly from the requirement of data to be manually inputted into each cell. Manual management not only takes up much of the financial team’s resources and time — it makes human error inevitable. The most commonly observed errors and risks comprise:
Despite all the efforts in spreadsheet risk management, the problem is not going away. In fact, more risk is being created as economies grow and businesses become more complex. The truth is that spreadsheets were originally designed for small pockets of data. They were never designed to handle large amounts of data in an interconnected environment.
Experts know well that the world’s most famous business spreadsheet saw the light of day before the World Wide Web and the internet browser — that is, before the explosion of interconnectedness. And interconnectedness lies at the heart of modern FX hedging programs.
Spreadsheets traveling back and forth
The most prosaic element of a FX program is the seemingly innocuous process of sourcing currency rates for multi-currency pricing purposes. Quite apart from the fact that many firms undertake it with irrelevant time-based criteria, the reality is that, once currency rates are sourced —for example, from the European Central Bank’s website— the commercial team receives the information on a spreadsheet.
Next, the FX exposure needs to be collected and processed. Budgeting, as we know, is a process that involves commercial and production teams, purchasing managers, economists, human resources departments and treasury teams. In other words: the cornerstone of the hedging program is the result of dozens, or more likely, hundreds of spreadsheets traveling back and forth across the enterprise. At this point, spreadsheets risk is only in its initial stages.
Depending on the forward discount/premium of the currencies involved, conditional FX orders are set. The information must be provided by the relevant commercial teams/purchasing managers — on a spreadsheet. Then the trade phase kicks in. If manually executed, several processes take place: approval request, first review, second review, final approval. Yet more spreadsheets are transferred in the process.
And what about the FX payments and collections process? And the FX accounting and performance analytics stages? You guessed it: critically important information is subject, once more, to data input errors, copy & paste errors, formula errors and formatting errors. These are the ingredients of a potentially nightmarish scenario. Even for the best-designed currency hedging programs. And even for programs implemented on brilliantly designed spreadsheets.
FX Automation: taming spreadsheet risk
In an increasingly interconnected world with more complex business models, spreadsheet risk can be a silent killer of performance. Business managers face enough risks in the day-to-day management of their operations, and treasurers in particular have enough on their plates to worry about the spreadsheet risk in their FX hedging programs.
It’s high time they work to better manage this risk. Here, Currency Management Automation is your company’s best antidote. These software solutions use Application Programming Interfaces to ensure that data can flow seamlessly between different systems (ERP, TMS) and software without any need for spreadsheets.
The time to act is now.