simplifying regulatory compliance for your fx hedging program

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Simplifying Regulatory Compliance for Your FX Hedging Program July 28 th , 2016

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Page 1: Simplifying regulatory compliance for your FX hedging program

Simplifying Regulatory Compliance for Your FX Hedging Program

July 28th, 2016

Page 2: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2

Webinar Logistics

• Listen only mode during the webinar

• Questions – submit questions at any time via the webinar console. We will do our best to address all of the questions at the end of the session

For any technical issues before the webinar (difficulty joining, audio connection, etc.) – please contact GoToWebinar support team at 1-888-259-8414. If already in session, please chat any technical issues via text.

CTP accreditation – approval letters will be emailed within 3-5 business days to full session attendees

Recorded webinar & slides – will be emailed and posted under http://www.kyriba.com/resources/webinars

Page 3: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3

Today’s Presenters

Jonathan ZemanSenior Consultant

Tom GavaghanManager, North America Pre-Sales

Page 4: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 4

Deal Management

Valuations

Hedge Documentation

Automated Accounting

Agenda <placeholder>

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FX Program Management

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© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 6

FX Risk Management Processing

Collection

Classification

Aggregation

Policy Setting

Trade Capture

Visibility & Positioning

Limits Monitoring

Scenario Analysis

Valuation & Effectiveness Testing

Confirmations

Settlements

Accounting

Page 7: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 7

TO BE COMPLETED

Exposure Management

Collection

Classification

Aggregation

Page 8: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 8

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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© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 9

Establish and maintain limits

Track risks

Perform scenario analysis– What if?– Stress testing

Create reports– Internal– Regulatory

Middle Office Management

Page 10: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 10

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

Page 11: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 11

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

Page 12: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 12

Generate settlements

Electronic confirmations

Verification and approval processes

Generate accounting entries

Back Office Management

Page 13: Simplifying regulatory compliance for your FX hedging program

Derivative Accounting Compliance

Page 14: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 14

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…

Page 15: Simplifying regulatory compliance for your FX hedging program

Post Trade Environment Automation

Page 16: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 16

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

Page 17: Simplifying regulatory compliance for your FX hedging program

Derivative Accounting Compliance

Page 18: Simplifying regulatory compliance for your FX hedging program

© 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…

Page 19: Simplifying regulatory compliance for your FX hedging program

Post Trade Environment Automation

Page 20: Simplifying regulatory compliance for your FX hedging program

© 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

Page 21: Simplifying regulatory compliance for your FX hedging program

© 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)

Page 23: Simplifying regulatory compliance for your FX hedging program

© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 23

Thank You For Attending

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