FX risk, the Certificate in Financial Mathematics and Modelling (CertFMM) and IAS39

In the July/August edition of The Treasurer there will be a spotlight on FX risk and this aspect of treasury management is currently very much on our minds at the ACT. We have our annual foreign exchange seminar with the British Bankers’ Association on 14th July. David Blair from Nokia will be ably chairing the seminar and the opening session is given by Paul Fisher, who heads up the Foreign Exchange Division at the Bank of England. Even if we are seeing continued relative stability in interest rate markets, currency rate volatility must continue to be a real preoccupation for treasurers. I am sure that the seminar will be both a good primer on the issues and a guide as to how practitioners can and are reacting.

Another respect in which risk is on our minds at the ACT is in terms of the new Certificate in Financial Mathematics and Modelling (CertFMM). We are seeing very encouraging signs of interest in this qualification, which I see as an important addition to our educational offerings. CertFMM is both a standalone certificate and an eligible module for AMCT, the route into membership of the ACT.

CertFMM is a relatively unique qualification in this specialist area. External training offerings do not match the depth of our certificate; this view has been reflected in some exciting conversations that our education and marketing teams have had with companies that might support staff taking CertFMM. We are strictly limiting the enrolment numbers to facilitate more individual tuition so there is a ‘book now’ flag here if you or colleagues might be interested in adding CertFMM to your credentials.

We are still actively working with our technical team on the aftermath of IAS 39 and the related standards within IFRS. Our open letter to the IASB discussed the problems members and others have found with IAS 21 – most crucially in the treatment of FX differences on quasi equity loans that form part of the net investment in a foreign operation. At its June board meeting, the IASB Board decided to change IAS 21 so that these FX differences can be re categorised into equity irrespective of currency of the loans and even if from a sister group company. This was a most gratifying outcome.

Finally I should of course mention The Treasurers’ Conference for 2006. Once again we have an excellent panel of advisors; these include Gerry Bacon, Group Treasurer, Vodafone; Matthew Hurn, Group Treasurer, Dixons; Mark Kirkland, Global Head of Financial Risk and Cash Services, Philips Electronics; Andrew Longden, Group Treasurer, Shell International and Graham Wood, Senior Vice President, International Finance, E.ON. They have already been asked to comment on a very early first draft of the programme. We are delighted that David Blackwood, Group Treasurer, ICI has agreed to chair the conference in 2006. Do make a diary note now of the dates: 17-19 May 2006, when we will once again be at the Celtic Manor Resort.

By richard.j.raeburn@gmail.com