What's Neu - News from the The NeuGroup Network of Peer Groups

NeuGroups for FX managers confront new data opportunities and challenges during joint FX Summit meeting.

The key message from The NeuGroup’s FX Summit, a joint meeting of our FX Managers’ Peer Groups, was that more quality information leads to better decisions. Underscoring this message, presentations by co-sponsors Deutsche Bank and FiREapps provided numerous examples of how information, technology and analytics should be improving the hedging practices of multinational corporates.

FiREapps has built its business around helping multinationals get at better information about their FX exposures from their various ERP systems and other data sources. Wolfgang Koester, CEO and Co-Founder of FiREapps, said his company’s one word mission is “Confidence: giving treasures and CFO’s confidence that they know what their FX results impacting EPS actually will be.” In the latest release of FiREapps, there are numerous filters to perform analysis on the exposure data and drill down by currency, reporting entity and more to both better understand the sources of FX exposure on company balance sheets and validate with control frameworks that the data being drilled into represents real exposure. From there, treasury can calculate the net exposure and hedge it both more effectively and with higher levels of confidence.   

Building on this theme, Ramon Bauza, Head of Deutsche Bank’s North America Capital Markets and Treasury Solutions Risk Advisory team, presented a simple way in which FX managers can hedge a higher percentage of their exposures to reduce the earnings volatility impact of FX at less cost. Such a strategy when combined with higher confidence in the validity of exposure information would give treasurers greater confidence to boost hedge ratios above the current 50% norm today without fear of ending up over hedged. 

Not all the data trends will be positive for treasury, however. Participants also discussed the latest reporting requirements for derivatives trades under Dodd-Frank. Members expressed dismay at the administrative hassles expected in reporting inter-affiliate hedges, but also the public information that swap dealers (plus exchanges and SEFs) are obligated to disclose. Some model-based funds will invariably seek to pump this data into their super sophisticated analytical tools to try to discern patterns to help them predict and counter corporate FX trades. This helps explain the increased interest in Algo trading by corporates to help mask M&A-related and other sizeable FX transactions, especially in thinly-traded markets.  eFX platforms, including Deutsche Bank’s, will therefore be increasingly easing the automation of such trade execution strategies and the regulatory reporting and other post-trade processing required by them.

Other highlights from the meeting included a presentation on commodity risk management by one of the group’s more experienced commodity hedgers and an update on the key drivers of the global economy and their impact on the USD, plus the latest on Venezuela. We thank Deutsche Bank and FiREapps for their sponsorship along with the members of both FXMPG 1 and 2 for their active participation.

The NeuGroup's FX Managers' Peer Groups have been serving FX managers from leading multinationals since 2002. These two invitation-only membership groups meet separately twice each year to share insight, experience and benchmark approaches to topical challenges. They conduct a joint summit meeting on a bi-annual basis.

The NeuGroup is pleased to welcome Daisy Alba to our team as a Director, Peer Knowledge Exchange. Ms. Alba will play a leading role in facilitation of existing NeuGroups, including the Global Cash and Banking Group, and also help us to develop new peer groups going forward. She will also serve as a contributor to agenda development across all our meetings, NeuGroup Research, the NeuGroup Exchange online member community and our International Treasurer publication.

Ms. Alba brings with her substantial practical treasury and banking experience and, as a former member of our Global Cash and Banking Group, she knows firsthand the value we offer finance practitioners with leading peer knowledge exchange.   

Prior to joining The NeuGroup, Ms. Alba was responsible for managing global cash for EMC Corporation as Director of Global Treasury Operations. She was also responsible for EMC’s overall banking and liquidity management, including overseeing the company’s approximately $10 billion in cash, integration of new acquisitions, management reporting, business controls and global cash forecasting. Before joining EMC in 2003, Ms. Alba was a Cash Management Sales Officer for Fleet Bank and a Senior International Private Banking Analyst at Bank of Boston covering South America.

Ms. Alba is an active member of the Association for Financial Professionals and a Certified Treasury Professional. She has also has served as a board member for the National Society of Hispanic MBAs. Ms. Alba holds an MBA from Cambridge College and a BS degree in accounting from the University of Massachusetts.

We are pleased to announce that Deutsche Bank and FiREapps will co-sponsor our 4^th Biennial NeuGroup FX Summit with both our FX Managers’ Peer Groups (FXMPGs) in New York on March 19-21. Agenda planning for the meeting has begun, and topics ranging from the latest on Dodd-Frank’s impact on derivatives use in hedging to FX trading execution and the next-stage of evolution in eFX platforms to decision making surrounding earnings hedging are being considered. 

Deutsche Bank, which has been a frequent supporter of other NeuGroups, is sponsoring our FX groups for the first time. As the recognized Number 1 Foreign Exchange provider, we are very pleased to have them in the mix here.

FiREapps returns as a meeting sponsor to our FXMPGs, and is thus very well known to our members as a leader in FX exposure management, enabling them to better identify, analyze and manage FX risk using fact-based collaboration and avoid FX-related earnings surprises.

Each of our NeuGroups for MNC Foreign Exchange Managers meet twice per year, as do most of our groups, but they also come together for a joint summit day every other year, to accompany a meeting with their own group. This enables members to meet more of their peers in the NeuGroup Network, while maintaining the ability to share in-depth with the members of their own distinctive groups that they have come to know and trust.

For more information about membership or sponsorship of the FXMPGs, please contact afriberg@neugroup.com.

Although year-end brought a hint of certainty, 2012 saw a continuation of the challenges born of the financial crisis. Here is International Treasurer's list of the Top Ten stories that best described 2012.

Continuing the theme of the last several years, 2012 was a tumultuous 365 days. And International Treasurer had the stories to prove it.

In no particular order, the top story lines depict the on-again, off-again concerns with Europe and the prospect of a Greece or other Eurozone countries exiting the euro; changing dynamics in global treasury organization deemphasizing centralization in the US or Europe to help focus support on business in growth areas of the world; continued trouble in developing economies that hinders their ability to take up the slack for slower growth in the US and Europe; the changing nature of credit and counterparty risk assessment as post-crisis responses have become part of the new every day; the rapid change taking place in banking and the impacts on bank relationship management; and, finally, the growing impact to be felt from fiscal imbalances plaguing public sector institutions, while so many private-sector corporations have been hoarding cash.

See iTreasurer.com for the full list of top ten stories here.