simplifying regulatory compliance for your fx hedging program
TRANSCRIPT
Simplifying Regulatory Compliance for Your FX Hedging Program
July 28th, 2016
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Today’s Presenters
Jonathan ZemanSenior Consultant
Tom GavaghanManager, North America Pre-Sales
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 4
Deal Management
Valuations
Hedge Documentation
Automated Accounting
Agenda <placeholder>
FX Program Management
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FX Risk Management Processing
Collection
Classification
Aggregation
Policy Setting
Trade Capture
Visibility & Positioning
Limits Monitoring
Scenario Analysis
Valuation & Effectiveness Testing
Confirmations
Settlements
Accounting
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TO BE COMPLETED
Exposure Management
Collection
Classification
Aggregation
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Accounting and economic strategy and objectives
Aggregation of executed transactions in the market
Calculate market value of held positions
Centralized visibility of existing positions and exposures
Front Office Management
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Establish and maintain limits
Track risks
Perform scenario analysis– What if?– Stress testing
Create reports– Internal– Regulatory
Middle Office Management
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Collection and integration of auditable Market Rates:– Spot– Forward– Volatility Surfaces
Fair Value Measurements– Transactional & Portfolio valuations
Effectiveness Testing:– Critical Terms Matching, Shortcut, Long-Haul Regression
Valuation & Effectiveness Testing
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Best Practices Questions to Ask:
Topic Question
Front Office Ease of integration with ERP, and other exposure tracking tools
Middle Office Viability of market rates..visibility into pricing models and results
Back Office Integration and automation of the accounting entries back to ERP
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Generate settlements
Electronic confirmations
Verification and approval processes
Generate accounting entries
Back Office Management
Derivative Accounting Compliance
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Accounting Guidelines– ASC 815 / 820• Fair Value, Cash Flow, Net Investment
– Translation vs Transaction Risk
• Disclosures (Quantitative and Qualitative)
– Entity level (e.g. Foreign Exchange Risk)
– Revenue Recognition
– Initial measurement and Re-measurement
– ASC 830• Functional vs. Reporting Currency
– Parent and Subsidiary Relationship
FASB guidelines that systems can help simplify…
Post Trade Environment Automation
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Seamless End to End Accounting– Journal entry to general ledger account creation and
automation– Interfacing capability
Government Legislature– Dodd Frank / EMIR / Volcker / Basel III
Margin Processing– Cash position monitoring and reporting
Post Trade Environment Automation
Derivative Accounting Compliance
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 18
Accounting Guidelines– ASC 815 / 820• Fair Value, Cash Flow, Net Investment
– Translation vs Transaction Risk
• Disclosures (Quantitative and Qualitative)
– Entity level (e.g. Foreign Exchange Risk)
– Revenue Recognition
– Initial measurement and Re-measurement
– ASC 830• Functional vs. Reporting Currency
– Parent and Subsidiary Relationship
FASB guidelines that systems can help simplify…
Post Trade Environment Automation
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 20
Seamless End to End Accounting– Journal entry to general ledger account creation and automation– Interfacing capability
Government Legislature– Dodd Frank / EMIR / Volcker / Basel III
Margin Processing– Cash position monitoring and reporting
…
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 21
Further Reading
Blog posts:(subscribe to receive our blog posts under http://www.kyriba.com/blog)
FX: Managing Uncertainty in 2016
FX: To Hedge or not to Hedge, that is the Question
EM FX hedging: treasury management systems outshine ERP (Euromoney)
Questions?
Jonathan Zeman
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Thank You For Attending
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