From OTC to the UK General Election: shaping the future at the ACT Annual Conference

We have just held the ACT’s Annual Conference in Manchester which this year, took place over a packed two days. There will be a more detailed account of the conference in The Treasurer magazine but let me pick out some highlights.

This was generally an optimistic and forward looking event: a complete transformation from the First World War trenches that appeared on our screen in the 2009 conference.

Professor Tim Congdon put forward a view that the UK banking crisis was one of, largely, liquidity and not insolvency and “officialdom” should have responded accordingly. A commentary (or a reminder that the crisis will cost us all in the future) from Jane Fuller of CSFI on bank regulation was perhaps a little depressing for attendees - that is why we need to be vigilant and relentless in challenging regulation that is unnecessary and / or unhelpful. Jane also believed that bank capital levels were too low as we entered the crisis.

Sessions on alternative funding and the world after the storm were very well attended – often with standing room only. Supply chain finance (SCF) was an area of particular focus – and so it should be as SCF offers real opportunities to improve funding for companies without access to non-bank funding.

The discussions within the formal sessions, the exhibition hall and the bar indicated that we were returning to some degree of a new normal. There were some elephants in the room – during the conference the FTSE 100 fell to its lowest level for 7 weeks on the back of sovereign concerns in respect of Greece and Portugal. Richard Lambert of the CBI told us that CFOs wanted a clear winner from the elections on 6 May – although he personally believed a coalition government may be more effective than a single party with a very small majority. PY Gerbeau told us that, based on his own experiences in France, it would be a disaster for the UK if there is no clear winner.

What do the elections mean for the ACT? Well the CBI is gearing itself up to communicate with the expected intake of c250 new MPs to parliament. At the ACT we are concerned that the UK’s voice in the international agencies, with regard to OTC derivatives / bank regulation etc, is not diminished by any political changes or distractions that may stem from a hung parliament. We also want to see progress on non bank lending and bank competition.

During the conference debates, the dangers of proposals to force all derivatives via central clearing houses, the need to ensure that non-financial companies were exempted from these requirements and the need to avoid penal capital weightings for derivatives traded over the counter were all too clear. Not so clear was the threat to companies and investors from the move by the UK authorities to increase standardisation and transparency in debt markets. At our question time discussion the panel saw increased transparency as a positive move. Views on standardisation were ambivalent. The ACT’s view is that increased transparency should be good for corporates although some may have concerns about levels of disclosure. Investors may not see increased transparency as positive from a pricing perspective. Standardisation could, in the ACT’s view, be a negative step for corporates if it does not allow companies flexibility that reflects the nature of their business and relative credit ratings. So watch this space!

Attendance at the conference was nearly 20% up on 2009 and the buzz in the exhibition hall was very audible. There was no doubt that the exhibition was a great opportunity to catch up with clients and suppliers and highlight new developments in the treasury space.

We are already working on the 2011 conference which will be held in Liverpool on 10 and 11 May. Please put it in your diary now and, if you are in any doubt about the value of attending this - the largest treasury conference in the UK - speak to those who were there when you attend another ACT event in the coming months.

Matthew Hurn did a superb job of chairing this year’s conference and on 1 May took over from Gerry Bacon as President of the ACT. Matthew has helped the ACT establish a professional network in the Middle East. Matthew is based in Abu Dhabi and is the second President to be based overseas but he will be in the UK on a regular basis to keep us on track and represent the ACT at major events. Gerry Bacon has been a tremendous support to the ACT team during his term as President and we thank Gerry for his input and support.

A final note on the conference is to thank the 54 sponsors and exhibitors. We would not be able to put such a top class event without their support.

By Stuart Siddall