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Cash & Liquidity Management
Published  6 MIN READ
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‘Every little helps’

Straight Through Processing (STP) and optimal control over treasury processes is an objective of every corporate treasurer. In this interview, Helen Sanders, Editor, talks to Matthew Shelley, Treasury Operations Manager at Tesco plc, one of the world’s leading international retailers, about the benefits of e-trading and STP at Tesco.

Our primary motivation for e-trading was to achieve genuine STP in our dealing environment, which I'm delighted to say we now have.

How is Tesco’s treasury department structured?

The aim of our treasury department is to be ranked within Europe’s top five and we are certainly moving in the right direction. Although Tesco’s overseas business has continued to expand during the last decade, our team still consists of 12 individuals, across four main activities. A four-strong dealing team runs cash management and foreign exchange for the UK and overseas operations. Regional treasurers act as the interface between Tesco as a corporate entity and its various subsidiaries, promoting the treasury agenda in each country where the group operates. A middle-office team handles systems, management information and analysis, and two staff are designated to look at more complex pieces of funding. Outside Tesco’s treasury, accounting, settlement and confirmations are handled by Tesco’s back office team.

FX trading at Tesco is a mixture of liquidity hedging, goods for resale hedging and balance sheet hedging. Our liquidity hedging is primarily short-term as a result of mismatches in forecasting. For goods for resale hedging, we have different hedging strategies depending on the product (e.g. petrol versus food). Where appropriate, we aim to do all trades over dealing portal 360T. However, we recognised that electronic trading is a tool which needs to be used wisely and some currency pairs are best suited to telephone trading.