Solutions and Partnerships for the Next-Generation Corporate Treasurer

In recent years, companies have become increasingly focused on managing their FX risks. That’s because they face challenges from seemingly all sides: increasing regulatory constraints, bank-driven reductions of available liquidity, and on top of it all, the cost of hedging against all the volatility these factors create. Global trading and treasury solutions provider 360T is broadening its reach with new products, services and partnerships. One area in which the company is partnering with multinational corporations is in automated trading, with the introduction of its execution management system (EMS).

 
According to data collected by The NeuGroup, an independent company dedicated to leading peer knowledge exchange for treasury and finance professionals, treasurers put FX/commodities risk as one of their top priorities for 2016. And a recent study from Chatham Financial substantiates this perspective by showing that companies can lose billions of dollars annually due to unhedged FX exposures. 

So with FX top of mind, companies are seeking ways to hone their FX management strategies and generally bring a more comprehensive approach to foreign currency risk management. One way to get to that holistic approach is through automation, which then raises the question, “Which provider?” 

The answer isn’t always easy, but one way to arrive at it is to find a company that is growing in use and innovation, is backed by plenty of resources, scalable to your firm’s needs, and seamlessly integrates into your systems. Meeting these criteria is 360T, a global firm with German roots that operates in over 75 countries worldwide. The company supports not only corporates, but also a host of different clients and segments that operate within the global FX market. “The market structure as we know it is evolving, and 360T is very committed to ensuring that we can provide the relevant services to our clients so they can ensure transparent execution and business continuity”, Alfred Schorno, Global Head of Sales, 360T Group, says. 

360T was founded in 2000 in Frankfurt, Germany, and since then, supporting corporates’ needs has always been a core competency. More than two-thirds of its 1,600 buy-side clients are international corporations that use 360T’s multi-bank, multi-asset execution platform for trading over-the-counter FX and short-term money-market instruments. Average daily trading volume on the platform is 70bn euros. 360T “seamlessly integrate[s] into a corporation’s internal infrastructure… whether it is a treasury management system, an ERP or an accounting system,”.Schorno says.

There are noteworthy advantages for corporations who use electronic trading venues: greater price transparency, time savings and reduction in process risk, whether related to operations, price, markets, or liquidity. In adhering to the ‘new’ regulatory requirements, corporations would also do well to consider a venue that helps to improve the trading process with pre- and post-trade analytics. Key analytics are the foundation of execution optimisation, including, but not limited to, transaction cost analysis (TCA). “The entire range of 360T’s pre-and post-trade analytics gives the treasurers greater insight into their execution strategy and consequently increases efficiency in their day-to-day business, as well as predictability in the execution process,”  says Schorno.

Using the platform, treasurers can more easily mitigate risk while supporting their FX hedging objectives and compliance obligations. And perhaps most importantly, 360T has the capability to help companies navigate the various regulatory regimes that are evolving around the world.

The company services clients that operate in developed markets globally. It is also a growing presence in developing markets, including Africa, Latin America, Asia Pacific, Russia, and the Middle East.  Schorno says that 360T has been able to help clients in complex areas like Brazil, South Africa or India, where a myriad of regulatory rules and regimes, and tight restrictions on currencies can stump even the cleverest treasurer.

“We support clients that are either domestic to those local markets or international clients that have local operations,” he  says. For instance, 360T might have a client domiciled in Dublin who also maintains operations in Brazil, and since the Brazilian real is an onshore-restricted currency, their local desks have to trade with local banks or liquidity providers. “We can facilitate centralised and decentralised treasury structures, where the head office has oversight so they can empower, enable and monitor trading activity at all their different branches around the world.”

Partners and consultants

One special aspect of 360T’s proposition is its strategic partnerships. The company partners with a number of organisations in order to provide its clients with a broad spectrum of solutions and seamless integrations. This includes companies like Misys and BELLIN for post trade automation, in addition to multiple well-known and even bespoke TMS, ERP, and accounting systems.

The company counsels many of its clients, helping them to understand the countless complexities of today’s markets. “It’s very much a consultative operation; we ask all of the relevant questions to understand what our clients are doing right now,” Schorno says. This includes establishing which processes are already in place and how they influence client operations. “We’ll ask and sometimes challenge them as to why they’re doing something in a certain way with the goal of helping them determine the best solution for their needs,” he says. That result allows the company to reduce costs and ensure that they are executing according to best practices while adhering to the highest regulatory standards. This can save companies a lot of money on a monthly basis, particularly when it comes to achieving best execution.

“There are many different ways that we approach working with clients but we always like to understand exactly what they’re trying to do, what they have been doing, and then incorporate our experience to give them a solution that is designed for their end-to-end workflow and  helps  to  improve  their  execution  process,” Schorno says.

And 360T has found treasurers to be receptive, particularly as they operate in a world of restricted and sometimes shrinking resources. One of the driving forces of automation in treasury over the last decade or more has been the unwritten but all too evident convention of ‘doing more with less’. With that constantly in mind, treasurers are always on the hunt for better, faster, and more efficient ways of being more productive. Moreover, the impact of regulatory change on corporate FX management processes plays an increasing role.

A regulatory future

”Given the structural shift ongoing in the market and the associated progression of the FX market, it is even more important for our clients to become the next generation treasurer. 360T allows participants to choose the right style of execution they need while giving them the ability to quickly respond to the impact of evolving market conditions,” says Schorno. And being able to promise business continuity means widening the range of products offered. 360T provides so-called vanilla foreign exchange products that include FX spot, FX forwards, swaps, non-deliverable forwards, non-deliverable swaps, and options. 

He acknowledges that currently clearing is less important to corporate treasures because so far they are exempt from those particular regulations and clearing rules. But it does have a related impact as it affects the banks with which corporates have relationships. “And maintaining relationships with their banks will absolutely be relevant to them.”

The challenges of today need automation

The FX market has undergone massive technology-driven changes over the last 10 to 15 years, particularly since the financial crisis. But despite the advances and robust offerings out there, corporate treasuries have still been slow to automate when it comes to meeting the challenge of getting visibility to their FX exposures. A March 2016 survey from Deloitte bears this out: the lack of FX exposure knowledge was reported by 56% of the survey respondents.

That’s far too many corporations losing far too much money to negligence. Whether it’s a company with a comprehensive offering like 360T, with millions at stake, it’s an issue that companies need to address, and is one that should be confronted sooner rather than later.

Providing a holistic offering with Deutsche Börse 

360T was purchased by Deutsche Börse 2015 and Schorno says that the tie-up is helping the company innovate. “We are now at the forefront of Deutsche Börse’s FX strategy; 360T is responsible for everything relating to foreign exchange within the Deutsche Börse Group”. Schorno also points out that this means product offerings and support will only get better. “For our existing and potential clients, 360T as they know it will remain consistent,” he says. “Our business and commercial model, our agreements, and our people all are remaining consistent” with the only change being improved and expanded listed FX derivatives products.

“It has been a very complementary marriage,” says Schorno. 360T has immediately been able to bring new offerings to clients to help them navigate the changing market structure that foreign exchange has been witnessing — particularly those driven by new regulation. For instance, getting together with Deutsche Börse has allowed the company to offer a unique breadth of product choice within OTC and exchange-traded FX, such as FX futures. “So we will now be able to offer clients what they need based on current market structure and what they could potentially need based on future market structure,” Schorno concludes.

And so far that future appears to be highly regulated; an area where 360T knows it can provide valuable solutions.