Corporate treasurers’ input will be key for supporting business recovery plans amid the COVID-19 crisis, according to Jennifer Barker, head of wholesale payments product delivery at JPMorgan. Speaking in a recent podcast from PYMNTS.com, Barker stressed that, as the pandemic goes on, corporates’ questions around liquidity and cash forecasting will make it “really critical for treasury to be at the table”, particularly in light of two general themes.
The first, she said, is basic cash management: “Let’s look at how every dollar is being spent today… if it’s discretionary, can we push it out, or divert the cash to more critical parts of the organisation? Are we inculcating a cost-consciousness throughout the organisation – not just in treasury, but in other types of spending? Capital expenditure – is now the right time to be able to do that?”
She noted: “Treasury is in a unique position to really help the company think through those questions, because of its role in forecasting cash, managing cash – and typically, functions like accounts payable and accounts receivable, as well as some other financial risk management functions are caught up into treasury.”
Turning to her second theme, Barker explained that use of technology in cash-flow forecasting is “a really important conversation right now… Technology can help create efficiency at times like this. So, do you have tools to really forecast your cash? Do you have visibility tools to look at your account structure, and really understand where your liquidity is? And are you concentrating that in the most optimal manner so that you have cash on hand?”
Barker added: “The other element of the conversation is that cash-flow forecasting isn’t entirely about where the money is and how much a company has to deploy – it’s also taking it a step further in this environment and looking at your vendors and customers.”
With Brexit almost complete, the Financial Conduct Authority (FCA) has launched a consultation on a proposed, new regulatory system for UK-based investment firms. In the document’s foreword, FCA interim CEO Christopher Woolard writes: “Investment firms are critical players in the UK and global economy. They help ensure capital is allocated efficiently and appropriately, and help individuals make the most of their savings and investments.”
At present, the UK plays host to 3,000 investment firms, making it by far Europe’s largest market. On 26 June 2021, the EU’s new, dual-track regime for regulating such firms – the Investment Firm Directive and Regulation (IFD/IFR) – will take effect. However, with the UK’s transition period for leaving the EU set to expire at the end of this year, the FCA has drawn up plans for domestic rules that it says UK firms would welcome.
In particular, the rules seek to emulate the EU’s new method of reviewing firms in accordance with so-called ‘K-factors’ – risk gauges based around firms’ sizes, how much of their clients’ cash they hold, concentration risk and other key determinants. In the FCA’s view, UK-based firms are likely to embrace the proposed regime because it presents five key advantages:
Woolard adds: “A new UK regime would represent a significant improvement in the prudential regulation of investment firms. For the first time, it would deliver a regime that has been designed with investment firms in mind, replacing many rules that were largely designed for deposit-taking credit institutions.”
Trade body the Italian Banking Association (ABI) has signalled its eagerness to help towards the development of a European central bank digital currency (CBDC). In a 30 June statement, the ABI said that it had set up an expert group dedicated to researching cryptoassets and digital money. Following that work, it announced, Italian banks are ready “to participate in projects and experimentations”, with the aim of fostering a European CBDC via a national pilot scheme. The sector’s readiness has stemmed from the expert group’s “concrete realisation” of competencies in distributed infrastructure and governance.
A number of considerations have underpinned the ABI’s stance. Firstly, many Italian banks are already members of the Spunta DLT scheme, in which they have harnessed distributed ledger technology for interbank reconciliation. “They want to be part of the change that comes from such an important innovation like digital currency,” the statement noted. In addition, the ABI stated, a CBDC would lead to the creation of financial instruments capable of meeting innovation needs in line with the current regulatory frameworks, existing instruments and interoperability with the analogue world.
Looking ahead, the ABI added, the launch of a European CBDC would promote “several very interesting use cases”: i) fostering peer-to-peer value transmission; ii) supporting money exchange between person and machine, and in machine-to-machine scenarios; iii) facilitating cross-border transactions settlement; iv) reducing interest rate, exchange and counterparty risks; and v) promoting the automatic execution of payments in routine situations, reducing administrative burdens.
Software provider GTreasury has struck a deal to bring Goldman Sachs’ Global Payments suite into its service offering, under an arrangement in which the investment bank will also serve as strategic partner. The firms say that GTreasury users who take advantage of the Goldman technology now at their fingertips will experience five main benefits:
GTreasury CEO Renaat Ver Eecke said: “Corporate treasurers have welcomed our innovative, single-solution strategy, and the company has grown to become the leading integrated treasury system. We welcome Goldman Sachs Transaction Banking as a strategic partner… This is yet another example of how GTreasury can leverage a true, fully integrated single platform to provide unique end-to-end solutions for treasurers around the world.”
Goldman Sachs global head of Transaction Banking Hari Moorthy added: “GTreasury customers will quickly see the benefits of the frictionless, transparent payment experience and the competitive pricing that’s inherent to Goldman Sachs Global Payments. We are proud to partner with GTreasury to introduce this innovative yet simplified approach to making payments across the globe.”
Singapore-based trade finance operator Contour has sealed a formal partnership with paperless trade specialists essDOCS, following a recent pilot venture in which the firms teamed up on a paper-free transaction between Baosteel and mining giant Rio Tinto. Under the partnership’s terms, essDOCS’ CargoDocs solution has been integrated with Contour’s offering: an open network – powered by R3’s blockchain software Corda – that aims to boost communication and transparency between banks, financial institutions and corporates when conducting trade finance agreements.
The integration provides users with complete access to original electronic documentation and data relevant to any given transaction – for example, under a letter of credit – consolidated within the Contour system, providing a holistic solution that eliminates data siloes.
Contour CEO Carl Wegner said that the tie-up furthers his brand’s goal to digitise trade finance for the benefit of the planet. He explained: “With environmental concerns around the overuse of paper in the sector – as well as the need to conduct business in a safe, yet practical manner, due to the impact of the COVID-19 pandemic – this collaboration will allow us to provide electronic documents on our network, digitise the sector and improve the way trade finance is conducted.”
essDOCS co-CEO Alexander Goulandris added: “Digitisation is no longer a ‘nice to have’, but rather a critical capability that streamlines trade and protects stakeholders. Cross-platform collaboration allows supply chain data to flow seamlessly, and is vital to enabling corporates and banks to benefit from more complete paperless trade solutions.”