European regulation – have your say

ESMA SMSG call for candidates The European Securities and Markets Authority (ESMA)* is seeking candidates to represent the interests of financial markets stakeholders of all types as members of its Securities Markets Stakeholders Group (SMSG). The SMSG helps to facilitate consultation between ESMA, its Board of Supervisors and stakeholders on ESMA’s areas of responsibility and provides technical advice on its policy development. This helps to ensure that stakeholders can contribute to the formulation of policy from the beginning of the process. For more information on ESMA, visit the website. It would be good to get treasurers involved in the group, particularly since

A week in ACT’s Policy & Technical

“What do you actually do?” I am often asked. Well here are some notes about last week…a typical week?

What do you actually do?
What we do is entirely contingent on what is needed. But broadly speaking, this splits into two categories: dealing with legislators and others on new rules and market practices or keeping members up to date and well informed. Influencing and informing. So the objectives remain but the work changes.

Currency devaluations – what should the treasurer do?

There has been a lot of comment in the press recently concerning the topic of how the movement of exchange rates can influence economic growth in an economy.

In broad terms a country with a weak currency should be more competitive compared to one with a strong currency, mainly down to lower labour costs. Accordingly a weak currency should boost exports and hence economic growth, something which almost every country seeks. As a result governments may adopt policies designed to weaken their currency and so provide competitive advantage.

Manipulation of markets and manipulation of accounts

The press is full of issues around the manipulation by Barclays Bank of their input into LIBOR calculations. They did this to seek advantage to themselves and sometimes to help out some key contacts. The behaviour has been described variously as criminal, illegal or deceitful. Whatever describes it best, the damage done to the reputation of the bank has been high and this must spread to the reputation of other banks, both in the City of London and elsewhere. Employees move relatively freely between banks and while many banks and their employees have very high integrity, this kind of behaviour

Bank mandates

Older treasurers (and possibly younger ones) will recall the days when a bank mandate for a company was a fairly simple affair. There would be panels of signatories and payments were controlled usually by the seniority of the staff. Senior managers gained confidence that they had the final word on cash leaving the firm. That confidence was probably misplaced. Many individuals at different levels can bind the firm with purchase orders, and in fact control should be at that level rather than the actual payment authorisation. Dealing mandates were rarely used; dealers at banks usually had a personal relationship with

Use and misuse of derivatives

Treasurers are always learning and always having to deal with change in their own firms as well as changes in technology, financial markets, economies, fashion and convention, among others.

Two case studies are presented in this month’s faculty offering as cases of good and bad treasury management and in each case there are lessons for today’s treasurer looking for value in the financial markets and the reduction of risk in their firm.

Case Study 1

Corporations as lenders / supply chain finance

Banks are very much the part of the financial universe under the spotlight at the moment. There are so many changes affecting them, from regulation, retail separation and political pressure on wages and bonuses, to euro zone pressure and recessionary risks of lending, that we are all becoming scared that they will not be able to act like banks and lend to corporations. Much effort, including from the ACT, is therefore to understand the implications of this and one path to follow is to investigate how non bank corporations might fill the gap left by bank lending.