How specialisms can be the way forward for treasury

Moving away from the traditional in-house treasury, Lisa Dukes draws on her experience to help corporates find their voice and bring innovation to finance, risk and FX

At the start of this year, Lisa Dukes, together with her long-standing colleague Chris King, launched a corporate finance and risk management firm. Here, Dukes tells Philip Smith about the growing need for specialisms, the importance of giving corporates a voice in the FX markets and why the Global FX Code matters.

Tell us about Dukes & King, why is the time right to co-found a treasury start-up, and what are your plans for the future? How will your experience within a corporate help you with this new venture?

I have worked at the same organisation for 13 years and have been fortunate enough to see a company go through almost every change cycle a company can. This gave me a great breadth of experience in managing change as well as managing a concentrated set of economic exposures. 

Having recently co-founded Dukes & King, a corporate finance and risk management firm, we want to roll out the same innovative and value-enhancing corporate finance that we have undertaken over the past few years. I am looking forward to continuing to focus on innovation and development, using our strengths (and battle scars!) to maximise value while proactively managing risk for the companies we support. 

Every company needs a treasurer – and every treasurer has their own strengths and areas of focus. We increasingly see areas of specialism within the profession and a move to securing specific expertise when it is required. This should enable cost-effective, optimal diversification and stronger treasury functions. I think it is a powerful move and could see our profession reach new heights – and something that I am very excited about!

You recently joined the Global Foreign Exchange Committee, as well as now being on the Bank of England Foreign Exchange Joint Standing Committee for two years – what does this involve and how important is it to have a corporate treasurer voice on these groups?

These committees bring together market participants, infrastructure providers and the relevant public authorities to discuss key issues concerning the wholesale FX markets. They are also custodians to the FX Global Code of good practice. 

Corporates are a large part of the FX market and my role, alongside Sarah Boyce on behalf of the Association of Corporate Treasurers (ACT), is to provide a corporate voice, perspective and market experience – adding cognitive diversity to the discussions. You can find out more about the committees here:

• Bank of England Foreign Exchange Joint Standing Committee
• Global Foreign Exchange Committee

The Global Foreign Exchange Committee is responsible for the FX Global Code – why is the code just as important for corporates as well as central banks and sell side financial institutions? Is it the vital G part of ESG for FX?

Absolutely, where FX is concerned it is the G in ESG [environmental, social and governance]. The code is a great example of how we can scrutinise ourselves and self-regulate as treasurers. For those unfamiliar with the code, it has 55 principles covering six key areas (including governance, execution and risk management).

As I see it, these are just some of the key benefits for a corporate in signing up to the code:

• It provides a proportional best practice framework that everyone can use and look to (without it being regulation).
• It helps set aspirations or areas that can be developed or targeted as companies grow or change – it also provides a great framework for training new members of the team!
• Boards/shareholders should gain comfort that the right ethos and thus appropriate governance is in place – by sharing your commitment there is an evidenced deeper investment in the rigour of your overall FX framework, making it more resilient while adapting procedures to ensure that all employees have the appropriate level of knowledge. 
• It helps level the playing field – giving us corporates a more equal voice in the market! But ultimately this can only be done with the commitment and desire to continually develop with the market, rather than just seeing it as a tick-box exercise.

The ACT has been a long-standing supporter of the code and has helpfully produced a briefing note. I would encourage anyone to find out more. I am happy to share my experiences and can hopefully help support corporates navigate their journey in this area.

What are the next challenges facing treasurers in FX and beyond?

I think the challenges typically remain very similar over time, i.e., how to best manage risk in an efficient way that can help enable strategy and drive value, noting that the wider markets and associated risks where we are operating are ever-changing. 

The broader challenge is not only being ready to react, but to be front footed, innovating and utilising our core skills as treasurers across all disciplines – anything from taking market opportunities such as thinking about inflation as both an opportunity and risk, considering financing in real terms as well as nominal, or seeking to align a company’s ESG goals throughout its capital structure. 

The events of the past few years have led to oversimplification in some areas within treasury, which can lead to narrower ways of managing risk, which perversely can add risk to businesses. It is important to understand risk appetite and what is appropriate today and for the future, while trying to make the approach as dynamic as possible.

It is essential to focus on the basics efficiently, which then allows treasurers time to help drive innovation and become the enablers of the wider strategy that we should be. It is only by questioning the status quo and not just blindly accepting existing policy and controls that we can make sure we adapt, progress and reach new heights. Everyone should ask what the policy of the future needs to be rather than relying on the policies of the past.

About the author

Philip Smith is editor of The Treasurer