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FX workflow automation for Asia treasurers

Raj Melvani
Raj Melvani
Performance Director – Corporates & Commodities, Asia

FX workflow automation can be transformational for Asia corporate treasurers, given the opportunity to accelerate the pace of operations, create cost efficiencies and reduce risk. But how many are fully aware of these cutting-edge benefits?

  1. Asia corporate treasurers encounter additional FX workflow complexities due to the multitude of currencies, regulatory regimes, time zones and languages.
  2. Across the trade lifecycle, three tools are essential for FX workflow automation — news and market updates, an electronic trading platform, and trade data.
  3. A Refinitiv corporate treasury best practice report highlights in detail the benefits of FX workflow automation for Asia treasurers.

An automated approach to managing FX can be transformational for companies within Asia. Yet many corporate treasurers remain unaware of what exactly is automated, and how it benefits their organization.

Treasurers run an increasingly complex system of cash flow, FX trading, bank accounts and risk management. For those operating in Asia, these complexities are further exacerbated due to the multitude of currencies, regulatory regimes, time zones and languages.

While these challenges have never been greater, solutions available today are more efficient and affordable than before. Instead of having to build an entire platform, treasurers can subscribe to a solution that will greatly enhance the department’s efficiency.

7 benefits of automated end to end FX workflows

Our experience working with corporates throughout Southeast Asia shows that end-to-end FX workflow automation can be truly transformational for treasury teams. But few are aware of the scope of automation, and the benefits it presents.

Across all industries, automation accelerates the pace of operations, creates cost efficiencies and reduces risk.

FX workflow management is no different to any other application. Treasurers can quicken how their FX is managed and executed, leverage operational efficiencies that bring gains well into double figures, and can eliminate human error and other risks.

Across the entire FX lifecycle — spanning pre-trade, trade and post-trade — four tools are essential in realising automation: Foreign currency position, news and market updates, an electronic trading platform, and trade data.

Pre-trade updates and controls

With automated real-time pricing updates delivered on-demand, treasurers can support trading decisions with timely, mission-critical information. This includes information on spot rates across major currencies and emerging market currencies, as well as FX forwards and non-deliverable forwards (NDFs). Treasurers can calculate fair value, as well as anticipate market movements and sentiment through news and alerts.

FX workflow automation for Asia treasurers
The pre-trade updates and control process

The provision of valuations are key. For derivatives, treasurers who gain information on fair value have the upper hand when negotiating pricing with banks, with economic indicators particularly important.

Should a country miss its GDP target, for instance, confidence in its currency could lessen, and increase the risk of FX exposure for corporates with operations in this market.

Likewise, the actions of central banks and governments can significantly impact currency movements and increase FX risk — treasurers don’t want to get caught out if Brexit becomes “Bremain” and are on the wrong side of a pound trade, for example.

Economic Monitor. FX workflow automation for Asia treasurers
Economic Monitor

As companies scale and onboard more subsidiaries, treasurers can execute trades on behalf of subsidiaries and numerous business lines; a useful tool for businesses that operate in restricted markets.

Companies can leverage net-trades, where receivables are offset against payments to reduce the number of transactions and save on costs, and can control who creates and approves FX orders. These can be made direct from the company’s treasury management system, or from an Excel file.

Simply enter the order details, and the trade is set to be executed.

Trade execution

Using an electronic trading platform, treasurers can issue a multi-bank Request For Quote across multiple currency instruments. This not only ensures treasurers have access to the best rates, it also prompts banks to be more competitive and transparent in their pricing.

For firms that trade via voice, this can be converted into a trade ticket and integrated into the FX workflow. This is a useful tool for treasurers who wish to maintain their relationships with banks, and who need time to get comfortable with FX workflow automation.

FXall. FX workflow automation for Asia treasurers

For more sophisticated corporate treasuries, users can place advanced order types, including fixing and resting orders, as well as leverage algorithmic trading, to match pricing for specific instruments and tenors.

Treasurers can set trade limits by user, currency and counterparty, and can make amendments to the trade if necessary.

Post-trade analytics and trade confirmation

Trade tickets and market data information can be delivered through data feeds directly into TMS/ERP systems, which enables treasurers to accurately assess valuation on their trade book. For derivatives, this includes mark-to-market valuations for IFRS 9 hedge accounting (if required), a way to ensure independent valuations versus bank valuations.

Multi-Asset Risk Valuation. FX workflow automation for Asia treasurers
Multi-Asset Risk Valuation

FX market data can integrate with datasets from across other asset classes, including credit and commodities, for more holistic portfolio revaluations. Data feeds also power trade analytics tools, which provide value added analytics, such as transaction performance against market benchmarks.

Finally, treasurers can centralize and automate trade reconciliation and matching with their counterparty bank; access SWIFT’s gateway for settlement; and access their complete trading history with full audit.

Discover FX workflow automation

To discover in detail how FX workflow automation is transforming corporate treasury, download the Refinitiv corporate treasury best practice report.

Corporate treasury best practice in Asia