Thomson Reuters – Corporate Treasury
Challenges in 2012
– Thomas Friedrichkeit, Treasury specialist, based in Vienna
Thomas.friedrichkeit@thomsonreuters.com
oo4315311229o
AGENDA
OPENING
NEW REGULATIONS
MONITORING – your daily life
SOMETHING FOR FREE – AND
SOMETHING TO WIN
LUNCH & NETWORKING
2
Thomson Reuters, who are we?
1. We operate in 3.000 cities, in 100 countries with
55.000 people around the world
2. 40.000 company customers, with over 500.000 end
users
3. Within our financial messaging community we have
over 130.000 active members
4. Within our FX trading facilities we do over 100 billion
dollar a day of FX spot
5. Our news reach an estimated 1 billion people a day
3
Our team at the conference:
1
Anca Antohi
Account
Manager
Treasury
3
2
Timea
Horvath
Client
Specialist
4
Thomas
Friedrichkeit
Treasury
Specialist
Monika
Horvath
Client
Specialist
4
Your challenges…
1. Get funding in light of Basel III
2. Regulation
3. Constant monitoring
•
Monitor best deposit rates and FX and other instruments
•
Monitor CDS of countries and banks and other corporates
•
Monitor ratings of banks and counterparties
•
Monitor peers and your sector
The times we live in…
• The world has become more uncertain for doing
business
• Natural disaster, technical disasters and politics
push us for constant look out and to monitoring
risks
• Hard job for treasurers – how to hedge against
business and economic risks?
• When and how to raise funds and what cash to
hold and where to hold it?
• It got very complex…
Even more Risks ahead…
• European sovereign debt crisis
• Impact on the Euro versus your home currency
• Constraints on fiscal policies and austerity plans
• Regulations may have unintended outcomes – e.g.
higher capital requirements for banks, squeeze the
real economy
• Are there risk free assets out there?
• Does our old economics model still work in light of
this global crisis in 1920/1930 style?
Just a look on the current debt crisis – will make us careful…
8
Regulations:
Market Themes and Drivers for 2012
Macroeconomic
instability
Sovereign debt is a huge issue for most developed economies and
there’s a risk of government default in a number of European countries.
The potential for Euro fragmentation and impact of this change on the
markets and countries economies.
Regulatory costs and
uncertainty
As banks implement Basel III and write down European bond holdings,
the availability of capital for profit generation will fall significantly. Controls
over proprietary trading and restrictions on internalization will hit profits
hard in investment banking operations.
There’s uncertainty over new regulation, particularly in relation to OTC
Derivatives trading (e.g. Dodd Frank in the US) which is making it hard
for participants in these markets to plan and allocate expenditure for
2012.
Rising cost of
participation in OTC
markets
In the US and Europe, certain OTC Derivatives trades will need to be
executed on a regulated trading platform, cleared through a Central
Counterparty and reported to a trade repository. Non-cleared trades may
be subject to additional capital charges.
This increased complexity will drive up costs, and greater transparency is
likely to put further pressure on margins.
†
Expected
9
G20 RECOMMENDED REGULATORY CHANGES
•In September 2009 the G20 recommended reforms to address the concerns
raised during the Credit Crisis, with an end 2012 deadline for implementation
•The G20 reforms look to have the following impact:
•A change to the OTC Derivatives trading workflow
•An increase in transparency
•Greater supervision of banks
•Other areas under scrutiny
•Limiting proprietary trading , commodity trading, high-frequency trading, short
selling and dark pools
•More focus on Hedge Funds, Private Equity Funds and Credit rating agencies
10
KEY CURRENT REGIONAL REGULATIONS
EUROPE / UK
Still drafting its legislation:
•
European Market Infrastructure Regulation
(EMIR) published15 Sept 2010, the Capital
Requirements Directive (CRD IV) and MiFID II
published 8 Dec 2010. Newly created regulator
ESMA (European Securities Market Authority)
responsible for implementation
•
Additional to G20 to date: increased transparency
requirements for all assets, best execution, HFT,
taxing banks (UK specific)
11
THOMSON REUTERS RESPONSE TO OTC
DERIVATIVES TRADING REGULATIONS
–
Thomson Reuters has worked closely with legislators and regulators to ensure that we
fully understand the proposed changes
–
Our priority requirement is to minimize disruption for our customers and to ensure that
we provide tools to meet your regulatory obligations
–
We defined the necessary changes to our services in conjunction with our customers
and have made them in preparation for the switch over
Themes
• The key themes impacting the Corporate Treasury community
Drive for increased
operational efficiency
Risk Exposure
Credit availability
& costs
Price Sensitivity
Access to markets &
liquidity
Regulation
13
Corporate Treasury Priorities & Daily Tasks
1
MARKET OVERVIEW (MICRO/MACRO)
2
FX OPERATIONS & FX EXPOSURE
MANAGEMENT
3
SHORT-TERM FUNDING AND INTEREST
RATE EXPOSURE MGMT
4
LONG-TERM FUNDING AND CAPITAL
STRUCTURE ANALYSIS
5
INDUSTRY PEER RELATIVE VALUE
ANALYSIS
6
TREASURY MANAGEMENT, RISK
MANAGEMENT & PORTFOLIO MGMT
7
INDUSTRY SPECIFIC
INTELLIGENCE & OVERVIEW
14
1
MARKET OVERVIEW (MICRO/MACRO)
Corporate Treasury teams need to keep
abreast of the multiple markets they cover
Corporate Treasurers have to keep a 'big picture' overview
of the markets
•You need to make decisions to effectively manage the finances
of your corporation and understand what your exposure is
across a variety of regions and product markets
•You need to be aware of the market’s evolving perception of
your firm relative to your peer group
15
Keep the overview
2
FX OPERATIONS & FX EXPOSURE
MANAGEMENT
Corporate Treasury teams need more information to
understand FX Exposure and manage FX operations
FX Risk management is increasingly important following
the financial crisis
•Corporate Treasury teams need better information to
understand & manage FX exposures and execute FX flows
•As corporations expand their global footprint through offshoring or broadening their distribution, they increase their
exposure to a larger number of currencies and the risk
management process becomes more complex
17
3
SHORT-TERM FUNDING AND
INTEREST RATE EXPOSURE MGMT
New benchmarks for understanding and
managing short term funding & interest rate risk
Treasurers must understand the factors that are driving
interest rate trends and have access to the pricing and
tools that will help them quickly analyze specific funding
options for short term investment decisions
•You need to understand and analyze specific funding options
so you can make the optimal recommendations to internal
stakeholders
•The level, shape and volatility of yield curves for the cash and
derivatives markets in which the firm operates will drive
decisions on how to manage interest rate risk most effectively
19
4
LONG-TERM FUNDING AND CAPITAL
STRUCTURE ANALYSIS
5
INDUSTRY PEER RELATIVE VALUE
ANALYSIS
Long term funding and credit worthiness
Since the credit crisis, accessing credit is more important
yet more difficult. Corporate Treasury, now more than ever,
need to monitor the credit worthiness of companies with
whom they have financial exposure
•Understanding, from a capital structure standpoint, how a company
compares to its peers and how the market perceives its relative
financial prospects (and therefore its credit risk) helps a Corporate
Treasurer take a stand on a given entity
•The Corporate Treasurer needs to access the availability of credit for
your own company. Being able to see how the company has been
positioned against other entities and benchmarks in the market helps
them determine how to manage their own books and make future
projections
21
CDS - overview
6
TREASURY MANAGEMENT, RISK
MANAGEMENT & PORTFOLIO MGMT
Accurately tracking Treasury,
Risk & Portfolio activity
Corporate Treasurers predominantly manage their
treasury, risk & portfolio management activity through inhouse or third party systems that must be fed with timely
and accurate market data.
•The analysis process must be created in a customizable format
that can model your investment strategy and portfolio of
products
•The analytical systems are likely to be used by multiple
departments and, therefore, must be compatible with other
products and services being used within the organisation
23
7
INDUSTRY SPECIFIC
INTELLIGENCE & OVERVIEW
Corporate Treasurers require industry specific
intelligence in asset classes outside FX
Because Corporate Treasurers cover a broad range of
assets within their portfolios, they will often need to
investigate particular markets in more depth.
•Although FX is the main asset covered by Corporate
Treasurers, Money Markets, Rates, C&E and Equities, all
require constant monitoring.
•A greater level of knowledge is sometimes needed within these
peripheral markets if they are to understand their own risk
exposure and, therefore, make sound recommendations to their
stakeholders
24
Calculate outrights and compare with prices
Stay in touch with markets and your brokers and
banks - free Thomson Reuters Messenger!
Please sign up with us, to receive our free
messaging – exclusive for the financial community
• Real-Time connections:
– Reach over 130,000 active Thomson Reuters
Messenger users
– Communicate with users on consumer IM
systems such as AOL® Instant Messenger™,
Microsoft® Windows Live™ Messenger, Yahoo!®
Messenger
• Integrated communication and content:
– Drag and drop charts, news or quotes from your
Thomson Reuters Desktop
– Share files such as company announcements,
market reports and more within your
conversations
• Chat Rooms:
– Discuss breaking news, rumors, trade details
or strategies with customers, peers and experts
within topic-based, persistent chat rooms.
• Access to enterprise data:
– Thomson Reuters Messenger can be
integrated into core business applications
such as trading portals, CRM systems or
corporate intranets using Thomson Reuters APIs.
26
Example of Chat Room
Questions?
28