BCR Publishing
We are the leading provider of news, market intelligence, events and training for the global receivables finance industry.
Working with industry leading organisations, experts, governments and universities, BCR Publications delivers expertise in factoring, receivables and supply chain finance to a global audience.
BCR has long been a beacon of innovation and excellence in the realm of receivables finance, playing an instrumental role in shaping the industry’s international landscape. Through its comprehensive conferences, insightful publications, and thought leadership, BCR has facilitated crucial dialogues and connections among industry professionals, driving forward the development of receivables finance globally.
Follow BCR Publishing
Free passes
For corporate treasurer roles/functions!
MIFID II – a short excursion into the MIFID landscape
| 10-5-2017 | treasuryXL |
MIFID
MIFID, short for ‘Markets in Financial Instruments Directive’ (2004/39/EC) and applicable since November 2007 has been a cornerstone of the EU’s regulation of financial markets since then. It aims to improve the competitiveness of EU financial markets by creating a single market for investment services and activitities. To ensure a high degree of harmonised protection for investors in financial instruments.
MIFID or MIFID I set out the conducts of business and organisational requirements for investment firms, authorisation requirements for regulated markets, regulatory reporting to avoid market abuse, trade transparency obligation for shares; and rules on the admission of financial instruments to trading.
MIFIR
MIFIR short for Markets in Financial Instruments Regulation is more than a directive. It is a European law and needs to be implemented as written. The member states have to comply with this regulation and the aim is to protect end consumers and markets. It unifies for example reporting and ensures that the reporting format is consistent.
The Markets in Financial Instruments Regulation and the Directive on Markets in Financial Instruments repealing Directive 2004/39/EC, commonly referred to as MiFID II and MiFIR, were adopted by the European Parliament on 15 April 2014, after heavy discussions that lasted more than two years.
MIFID II
MIFID II and MIFIR are building on the rules of MIFID I, already in place. The new rules are designed to take into account developments in the trading environment since the implementation of MiFID in 2007 and, in light of the financial crisis, to improve the functioning of financial markets making them more efficient, resilient and transparent.
MIFID II will be transposed into the national laws of Members States on July 3rd, 2017 and will apply within Member States from January, 3rd, 2018.
(Source: European Securities and Markets Authority (ESMA)
MIFIR reporting list
Implementing MIFID II and MIFIR will be a real challenge, as it brings enormous complexity for enterprises throughout the industry in terms of generating, collecting and processing financial data. We found a MIFIR reporting list, published by the London Stock Exchange Group, which is applicable not only in the United Kingdom.
In short they propose the following to firms to help them be in the best possible position for MiFIR reporting go-live:
More details can be found in the MIFIR reporting list of the London Stock Exchange Group.
There is little time left until the implementation, still much to do in the industry and it will involve considerable human resources and IT costs. The trading landscape will change significantly.
[button url=”https://www.treasuryxl.com/about/” text=”View more” size=”small” type=”primary” icon=”” external=”1″]
[separator type=”” size=”” icon=””]
The IT Savvy Treasurer
| 9-5-2017 | Patrick Kunz |
We cannot switch on the news without hearing about technological advancements which, supposedly, make our lives easier, better or smarter. We all embrace these, get used to them and cannot do without them anymore. Sometimes we think back to the time before these advancements and cannot image how we lived without them. The same applies to treasury.
I am 35 years old; my experience in treasury was always linked to IT. I sometimes hear stories from older treasurer who worked without computers, later tabulating/punch cards and still managed to do a good job in their field. Of course times have changed; information is faster than in these days and also the need to process it. We all had to embrace the new technology. In this blog I will try to analyse the link between IT and treasury and try to make predictions about the future or at least where I wish the future would go (in treasury terms).
Payments
In the old days payments were a manual process with people entering them in the banking system or sending them to the bank via fax. Nowadays, we link our ERP system with the banking system and have a batch file automatically added to the bank. With bulk payments a payment hub can be used which will make the whole process bank independent, fast and cheap. If wanted and needed the whole process can be made straight-through by automating it from creating a payment to approving it.
The future will make payments even faster (instant payments should be possible in the sepa region from November onwards), cheaper and more bank independent (PSD2 regulation allows non banks to link with your bank and provide (payment) services). Maybe we will be using our facebook account for payments sooner or later. Bitcoin could be an alternative payment currency and/or be used to hedge non deliverable currencies (to achieve this the volumes need to increase significantly).
Risk management
An important part of the treasurers work is risk management. Hedging FX, interest rate, commodity prices are daily business for a treasurer. Doing the deal is easy, doing the right deal is more difficult. A treasurer can only hedge correctly if he knows what he is hedging: the exposure. To know the exposure information of the business is key. The reason for the exposure originates in sales (FX) or procurement (FX and Commodity). These departments need to be aware that the actions they take might have consequences for the treasurer and therefore the treasurer needs to have some information. I have been at companies where sales was daily generating a lot of USD exposure at a EUR company. They were supposed to let finance know about positions. Often this was done at day’s end or forgotten and done a day later. Result: an exposure on USD without the treasurer knowing it; a risky position. IT helped to fix this. Sales entered a deal in a program and the relevant FX exposure was automatically shared with the treasurer via an API to the Treasury Management System. The treasurer could decide directly whether he needed to hedge or not and even aggregated deals to get better rates at the bank. For small deals a link was set up with a FX trading platform to STP them at the best rate.
The future in risk management will be even more automation within the company (internal) but also with connections to banks and risk solution providers. Prices are becoming more transparent due to the fact that bank independent solutions are available which compare prices, in real time. Risk management sales is becoming less a bank business. Brokers are having less hurdles to enter the market, due to IT platforms in the cloud. Why pick up the phone and call your bank for a EUR/USD quote when you can compare prices via an online platform and directly trade it? Often you don’t even have to settle via your own bank accounts but you can have it directly sent to your customer or supplier.
For Trade Finance blockchain will become the new standard. The financing and shipping of commodities is a rather paper based process which is inefficient and slow. Blockchain could automate and improve the speed massively. The challenge to achieve this is big as there are many parties involved, but initiatives have started so the future is beginning now.
Information
As above examples show information is key to a treasurer. Even more so, as treasury is often a small team and most of the information comes from other departments. To get this information the treasurer can use several nice IT solutions. The ERP systems helps, but the treasury needs to know where to find the information. A treasury management system is often used to sort all treasury related information. TMS can link with ERP systems or other systems to gather information. The TMS will sort this information so that the treasurer is well informed and can make decisions. When I started in treasury 10 years ago the market for TMS was small; systems were expensive and limited in use (payments only, fx only etc). Nowadays a TMS does not have to be expensive anymore. A SME (Small medium enterprise) could use it to upgrade their treasury information. Most TMS can be used for all aspects of treasury (cash Management, risk management, corporate finance, guarantees etc). This will give the tech savvy treasurer an edge. The treasurer with most information can make the best decision. In treasury taking decisions while being well-informed often means either costs saving (e.g. better cash position, lower working capital) or lower risk. The IT savvy treasurer contributes to an optimally functioning company; he/she should be considered a business partner; he knows your cash position, your risk position and your balance sheet, hopefully in real time at all times.
Patrick Kunz
Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV
Other articles of this author:
Flex Treasurer: The life of an interim treasurer
How much are you paying your bank?
National Blockchain Coalition: No Dutch Polder model!
| 8-5-2017 | Carlo de Meijer |
National Blockchain Coalition: raison d’être
The creation of the Coalition is an initiative of Team ICT, last year set up by the Ministry of Economic Affairs and is one of the action points in the “Digital Agenda” of the Dutch Government to accelerate the digitalisation of the economy.
The partners in the Coalition are convinced there is increasing need for corporates and government bodies to realise synergies between existing blockchain initiatives, facilitate them and bundle and share the knowledge already gained. Al these initiatives are being brought into the Coalition. But they also agreed that there is a need to create coherence between policy, regulation, supervision, maintenance and execution.
Main goal of the Coalition is to establish the preconditions needed for trusted and reliable blockchain applications. The collaboration aims, by means of collective initiatives, cooperation and knowledge sharing, to enable the Netherlands become front runner in the field of applying blockchain technology.
Some quotes (originally in Dutch!)
“The Blockchain Coalition stands for innovation and an open network approach. Cooperating on difficult issues that no one can solve on its own”. Minister Kamp
“Developing and introduction of blockchain ask for a coordinated approach of challenges by parties form various sectors. If The Netherlands in this pioneer stadium takes the chances there are, we could become a frontrunner in the blockchain area in the world”. René Penning de Vries, Team ICT
“We as employers organisation are extremely positive about this initiative and its timing. If we (in the Netherlands) collectively shoulder this project, I am firmly convinced that we will be frontrunner worldwide on blockchain.” VNO-NCW chairman Hans de Boer
“Most important lesson is that you cannot pick up this (blockchain) theme alone. Most value will be created if you bring more parties together and unites. That is also one of the main reasons to get to work with blockchain via a consortium”. Mariken Tannemaat, Chief Innovation Officer Nationale Nederlanden
Partners
This joint initiative has 23 founding partners and 8 sustaining organisations. Because the application of blockchain technology is expected to have a big impact on the financial sector, as well as logistics and energy sector, these are the best represented sectors in the Coalition.
From the financial services side banks like ABN AMRO, ING en Volksbank and insurer Nationale Nederlanden participate.
Other partner organisations are: Havenbedrijf Rotterdam, Enexis, Alliander, de Koninklijke Notariële Beroepsorganisatie, Brightlands, CWI, Inspectie Leefomgeving en Transport (ILT), de KvK, RDW, Rijksdienst voor Identiteitsgegevens, ECP | Platform voor de InformatieSamenleving.
From the government side participating bodies are: Ministeries van Economische Zaken, Infrastructuur en Milieu, Veiligheid and Justitie en Binnenlandse Zaken en Koninkrijksrelaties.
From the knowledge centre side: TU Delft, Universiteit van Tilburg, Radboud Universiteit, Centrum Wiskunde & Informatica, NWO and TNO.
Supportive organisations include: AFM, Betaalvereniging Nederland, De Nederlandsche Bank, de NVB, DutchChain, SIVI, StartupDelta en Verbond van Verzekeraars.
Action Agenda
The action agenda is a joint initiative of the above mentioned organisations. In this action plan it is described which steps the Coalition is going to take in the coming period to realise the various goals. The agenda contains three lines of action to boost blockchain expertise and operational readiness in The Netherlands.
The partners of the National Blockchain Coalitie will primarily focus on the development of digital identities, with which persons, objects and legal persons in the blockchain can perform transactions as part of a blockchain. Working on these identification processes requires the focus on both interoperability (APIs) and standardisation.
”Goal is to create stronger identities for persons, so that repetitive verification is not needed. This is one of the preconditions needed to let blockchain function well”. Program manager Ad Kroft.
Besides that the Coalition will also work on solutions in the field of legislation and acceptation. It is thereby their intention to work on the right conditions under which blockchain can be used.
Also arrangements have been made regarding education, knowledge sharing and strengthen skills. The third line of action is realisation of the Human Capital Agenda to improve the level of knowledge and skills on blockchain, both at an information-technical as well as on social-scientific, economical, legal, ethical and business themes.
Positives
Blockchain has the potential to make business processes more efficient and reliable. The Coalition partners foresee great possibilities within the country for improvement of service delivery, better control of production processes, cost savings, reduction of fraud and reduced cyber risk.The Coalition also foresees positive effects on the autonomy of citizens, transparency of transactions, cybersecurity and reduction of administrative burden.
“Blockchain plays an important role in the further strengthening of trust in the world of digital transactions. This technology brings positive effects for the efficiency of organisations that are active in the financial sector.” Arjan van Os, Head Innovation Centre
No Poldermodel
Collaboration, certainly when talking about blockchain is a necessity. To discuss the rules of the game, agree on common issues etc. But the participating partners in this Coalition should prevent that the final results are weakened compromises (for the sake off!!). The partners in the Coalition should keep in mind that in this field a Polder model to keep everybody satisfied is not the way!!!! Because that will leave the Netherlands behind, not in front. Besides, the benefits of blockchain can only be reaped at the maximum in an international context. And not isolated. This asks for international cooperation.
Carlo de Meijer
Economist and researcher