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Cash & Liquidity Management
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New Investment Landscapes, New Opportunities

by Jim Fuell, Head of Global Liquidity, EMEA, J.P. Morgan Asset Management

In this interview, Jim Fuell illustrates that while the changing market and regulatory landscape creates uncertainty, by preparing for change, there is the potential for treasurers to take advantage of new investment opportunities and by being open-minded in developing new investment policies, achieve better yields.

What are treasurers’ priorities when considering how best to invest their surplus cash?

The fundamentals of cash investment do not change, whatever the market conditions: to balance security, liquidity and yield. There have been, and continue to be, however, significant changes both within corporate treasury functions and the wider market that impact on how treasurers achieve this balance. A renewed focus on counterparty risk and market volatility, particularly in the years immediately following the global financial crisis, resulted in many companies adopting a ‘flight to quality’ in their investment decisions, and investment policies continue to be far more rigorous than in the past.

Treasury centralisation has been an important theme for some years, including pre-crisis, although the crisis added impetus in many cases. A centralised approach to cash and treasury management significantly influences the amount of cash that treasury is able to invest, and enables a more strategic approach to counterparty risk management and liquidity optimisation. To achieve this, treasurers are focused on achieving global visibility and control of cash, which can be particularly challenging when operating with multiple banks and across a diverse geographic footprint. In addition, improving the timeliness and accuracy of cash flow forecasts continues to be a priority to enable cash to be segmented for investment purposes and facilitate better decision-making.