simplifying regulatory compliance for your hedging program

Simplifying Regulatory Compliance for Your FX Hedging Program

July 28th, 2016

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

Today’s Presenters

Jonathan ZemanSenior Consultant

Thomas GavaghanManager, North America Pre-Sales


FX Program Management: Procedural elements to managing your FX Program

Valuations: Foundational building block to proper accounting treatment

Derivative Accounting Compliance

Automated Accounting

Agenda

FX Program Management


FX Risk Management Processing

Collection

Classification

Aggregation

Policy Setting

Trade Capture

Visibility & Positioning

Limits Monitoring

Scenario Analysis

Valuation & Effectiveness Testing

Confirmations

Settlements

Accounting


Balance Sheet– Translation & Remeasurments

Cash Flow– Forecasted revenue and expense

Integration = Centralization

Exposure Management

Collection

Classification

Aggregation


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


Establish and maintain limits

Perform scenario analysis– What if?– Stress testing

Report & Dashboard creation– Internal– Regulatory

Middle Office Management


Collection and integration of auditable Market Rates:– Spot Rates– Forward Rates– Volatility Surfaces

Fair Value Measurements– Transactional & Portfolio valuations

Effectiveness Testing:– Critical Terms Matching, Shortcut, Long-Haul Regression

Valuation & Effectiveness Testing


Electronic confirmation and matching process

Generate & Net settlements

Automated integration with GL

Back Office Management


Best Practices Questions to Ask:

Topic Question

Front Office What tools are available to easily integrate with my ERP(s), and other exposure tracking tools to track against policies?

Middle Office What is the source of my market rates for valuing my portfolio, and how easy is it to document our results for audit?

Back Office How do I get the proper accounting entries posted into my GL?

Derivative Accounting Compliance


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


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


Thank You for Attending! - 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)

http://www.kyriba.com/blog

http://www.kyriba.com/blog/thomas-gavaghan/fx-managing-uncertainty-2016

http://www.kyriba.com/blog/tom-gavaghan/fx-hedge-or-not-hedge-question

http://www.kyriba.com/company/media-coverage/em-fx-hedging-treasury-management-systems-outshine-erp


Thank You For Attending

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simplifying regulatory compliance for your hedging program

Economy & Finance