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

Blog entry
By bshegog, March 29, 2017
The Treasury Investment Managers’ Peer Group meets next month to prepare an action plan for market ambiguity. 
 
Frank Kelly, Deutsche Bank’s Head of Government Affairs, will kick off the TIMPG meeting by outlining how the new administration’s fiscal policy can influence the global markets. Top of mind issues include the impact of tax reform and possible repatriation of offshore assets. 
 
What to do with all this cash? To prepare for a possible influx of repatriated cash, members will discuss the challenging cash market and liquidity pool options. With money market fund reform, many members shifted funds into government money market funds. Now facing greater cash balances, this decision is being revisited. Members will share with each other how they are managing their liquidity pool. Are they staying put or moving back to prime? Have they found an alternative product? 
 
How do you prepare for market uncertainty? Tax cuts for corporations loom on the horizon and repatriation is up in the air. This session will focus on preparing for the unknown. Should members keep offshore portfolios more liquid or use possible repatriation to alter the balance sheet? Members will hear from Deutsche Asset Management’s experts and from fellow members on preparing for both events. 
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information. 
 
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Blog entry
By jneu, March 26, 2017
We wrapped up our 2017 H1 FX Managers' PeerGroup 2 meeting last Friday, sponsored by Thomson Reuters, which I had the pleasure of attending. In line with other recent NeuGroup meetings I've sat in on, I wanted to share my top takeaways:
 

1) FX help wanted. Several members in the opening session noted the challenge of finding experienced FX talent for their treasuries, especially at the senior analyst and manager level. Knowledge exchange on viable candidates that just missed being hired and a group job board may help take down member FX help wanted signs.
 
2) Focus on exposure. Technology applications to help FX managers better define and analyze their FX exposures were a major topic of discussion. FX management starts with the ability to define exposures and collect quality information about them. Members are either looking to deploy new solutions or build out the capabilities of those already implemented.
 
3) FX bank scorecards create wins. Several members shared the scorecard reports they use internally to evaluate their FX banks on trade pricing and performance and what they share with the banks during quarterly or annual reviews. Monitoring performance and sharing key metrics like hit ratios on requests for quotes are common, but even qualitative evaluations of items like post-trade settlement efficiency can lead to significant wins in bank-service levels as well as trade execution performance. Most member scorecards start with report data downloaded from FXall to produce their bank evaluation scorecards. New Execution Quality Analysis tools are coming from FXall later this year to make this even better.
 
Next up is our Treasurers' Group of Thirty Large-Cap Edition that will be meeting April 6 in New York with the support of Deutsche Bank.

For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates over 30 face-to-face meetings to inform actions, transform practices, and enhance careers for more than 400 members from across treasury and finance functions, covering multiple industries and global regions. Visit www.Neugroup.com for more information about peer groups and www.iTreasurer.com for content and news.

 

 

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Blog entry
By afriberg, March 22, 2017
The Foreign Exchange Managers’ Peer Group kicked off 2017 with a dynamic day and a half in New York, tackling a wide range of FX-related topics. 
 
NeuGroup’s first meeting of the year, sponsored by Société Générale, covered everything from a member’s take on designing an effective hedge program using cash-flow at risk as its foundation, the options vs. forwards instrument-mix dilemma and how to get the best execution price when you trade, to the benefits of net investment hedging, the proposed changes to hedge accounting rules and outlooks for the US dollar and interest rates. 
 
Membership does have its privileges, so here is just a small sampling of the key takeaways from the meeting:
 
Just how much higher can the dollar climb? SocGen’s chief US economist Stephen Gallagher provided a long list of factors supporting a still stronger US dollar, including likely Federal Reserve rate hikes, President Trump’s promised tax reform and protectionist policies, European elections potentially leading to an EU breakup, China’s economy slowing and the RMB weakening further. But none of those are secrets and are likely already priced into the currency. Highly liquid currencies such as the GBP and the JPY are at historically weak levels relative to the USD, suggesting those currency pairs tightening rather than widening. 
 
Fed, ECB and BoJ policies more likely to converge than diverge. According to Subadra Rajappa, SocGen’s head of US rates strategy, the Fed is anticipated to pursue a moderate three to four hikes in 2017, but an unexpectedly strong dollar could slash that number, while more than one increase per quarter would be a “shock to the market.” Get ready for at least a mild recession over the next few years. Rate hikes are unlikely to arrive anytime soon from the European Central Bank (ECB) or Bank of Japan (BoJ), but at least they’ll back off their quantitative easing — the ECB by as early as 2018. SocGen foresees treasury yields rising to 2.9% and bund yields to 1%.
 
Identify, quantify and mitigate risk. A member shared his company’s three-step approach to managing FX risk. The goal is to present a straightforward analysis to management, starting with analyzing how much of their bottom line should be attributed to FX on a year-over-year basis. Using sophisticated methods, treasury can provide forward-looking metrics and cost-benefit analysis to aid decision making on hedge approach, ratios and tenors. 
 
Options on members’ minds. In a lively round-robin, FXMPG members made it clear that as interest-rates rise, options are under consideration, but when to use them? Considerations include whether or not they have an options premium budget and if “taking a view” is something management is comfortable with. A member said her group had developed a way to determine when to use which – options or forwards – but struggled with when to pull the trigger on implementation.
 
FASB aims to make hedge accounting easier to get and keep. Rob Baer from Bloomberg gave the latest update on the Financial Accounting Standards Board’s (FASB) deliberations on proposed changes to hedge accounting rules. Although members are somewhat concerned about the “geography” of where hedge gains or losses will end up on financial statements, the new rules will greatly ease the operational burden to achieve hedge accounting and remain effective on cash-flow hedges, for example, plus make it easier to hedge commodities.  
 
The next meeting of the FXMPG will be September 7-8. 
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information. 
 
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Blog entry
By afriberg, March 20, 2017
Large-cap treasurers question the policy initiatives of the new US administration and their impact on large US MNCs. 
 
Financial markets have been optimistic since the election of Donald J. Trump, in part because many anticipate the incoming administration will pass some version of a business-friendly tax reform bill. What are the proposals in play, and where do they stand? With more than $2.5tn held by US corporations overseas, how will the release of these funds and other US policy changes impact the FX, rates and other financial markets, and what unanticipated consequences might lie ahead? The Treasurers’ Group of Thirty Large-Cap Edition (T30 LC) will take a deep dive into the global economic and political environment during its meeting April 6, in New York, sponsored by Deutsche Bank. 
 
Of course, broad tax reform and mega-sized cash repatriations are not guaranteed, and even so, would not be immediate. Other agenda toppers, as such, deal with evergreen topics like capital raising, i.e., best practices for frequent debt issuers. Treasurers are also keenly interested in benchmarking with each other on capital allocation. Is there an optimal way of allocating capital toward growth projects, acquisitions, dividends and buybacks, and what role should share repurchases play in the treasurers’ tool kit toward total return to shareholders? It is common, but is it effective?
 
Finally, members will discuss where to invest cash and engage one another over “Lunch with Table Topics” – a chance for the group to optimize time away from the office by reviewing counterparty risk, FX hedging, bank relationship management, treasury systems and other relevant matters.  
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information. 
 
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Blog entry
By thoward, March 14, 2017
In this month’s iTreasurer, we look at how to structure the portfolio with interest rate rises looming on the horizon, as well as an examination of a relatively unknown part of supply chain finance called trade credit insurance. In between we delve into potential flies in the ointment when it comes to M&A and a possible repatriation holiday.
 
Beginning on page 1, contributor Barb Shegog discusses portfolio strategies in an environment of rising rates. But also critical is not waiting for rates to rise before you make these adjustments. Whether the money is managed inside or outside, or in whatever instrument, make a move now and be sure the result is a flexible portfolio. “There is no more sitting on the sidelines to see how things play out. So waiting for rates to rise isn’t really an option anymore,” Ms. Shegog writes. Or for that matter, sticking to assets that haven’t risen in a while, like T-bills and repos, both of which have spent much of December and the beginning of the new year at subdued levels.
 
On page 6, iTreasurer highlights Standard & Poor’s view that despite a good M&A outlook, what could pose a challenge are antitrust forces. “[U]nder a holistically less stringent regulatory backdrop, antitrust enforcement will likely remain a hindrance to specific large transactions” this year, S&P said. The rating agency goes on to say that this could have negative credit implications, “particularly if better credit quality was an anticipated outcome of the transaction.”
 
Our peer group meeting summary this month is from the NeuGroup’s Treasury Investment Managers’ Peer Group or TIMPG. Corporate investment managers have a host of issues to be concerned about, among them low rates, floating NAVs, credit issues and new MMF regulations. In this uncertain atmosphere, members—along with their compatriots in the market—have been left to ponder where to put cash next.
 
On page 11, iTreasurer delves into a small corner of supply-chain finance called commercial credit insurance, also known as accounts receivable insurance. Commercial credit insurance is the working-capital credit instrument that protects against counterparty default or simple nonpayment in the supply chain. Treasurers are finding that the supply chain can offer companies and their treasurers multiple platforms to facilitate consistency and liquidity. Yet underneath the new technology there remains a core question to answer for the supply chain to work. What is the most efficient source of credit to enable the supply chain?
 
Finally on page 15, in “Repatriation: Careful What You Wish For,” iTreasurer takes a look at a report on some of the possible downsides of repatriation. That’s because repatriation might result in “substantial share-repurchases that would have an immediately negative credit impact if they hadn’t already been factored into the agency’s long-term credit analysis of the company’s credit.” Then again, this could be modest; and advocates could argue the benefits of $1 trillion returning to the US far outweighs some of these impacts, particularly considering that most of those companies with lots of cash overseas—Apple, Oracle, Cisco, et al.—aren’t exactly unhealthy. But food for thought.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
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Blog entry
By jneu, March 06, 2017
The Latin American Treasury Managers’ Peer Group meets next month to bridge the risk and opportunity in the region for MNC businesses.
 
MNCs are facing a predicament in global markets as they seek to understand the impact of US policy change under President Trump and the international, regional and local responses to it. US MNCs in particular likely face additional policy backlash in Latin America, from Mexico southward. Accordingly, this is an opportune time to discuss with peers the way forward for treasury activities supporting MNC business in the region, including plans to bridge all types of border controls.
 
Meanwhile, keeping on top of funding, working capital and liquidity improvement opportunities may be critical as cross-border flows of funds could become disrupted and certainly at risk with rising volatility in foreign exchange rates. As usual, the impact on regional suppliers could be worse, increasing the value of adapting global supply chain finance platforms to the region.
 
Finally, as all these challenges come at a critical juncture of change for banks operating in the region, driven largely by post-financial crisis global bank regulation, the group will also evaluate bank relationships and evaluation metrics, comparing global, regional and local players active in Latin America today. In other words, which banks will be there for them when they need vital services or solutions?
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.  
 
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Blog entry
By afriberg, March 03, 2017
The FX Managers’ Peer Group 2 (FXMPG2) tackles FX execution in volatile times in meeting March 23-24 in New York City, hosted and sponsored by Thomson Reuters. 
 
It’s not unlikely that we are looking at a year of increased FX volatility: new president, a new outlook on trade relationships and several big events on the European political calendar. One NeuGroup sponsor also predicts an increase in intra-day FX volatility. This puts the onus on FX managers to focus on improving FX trading and execution practices, which was a highly rated topic for the FXMPG2. The sponsor and a member will present jointly on best practices in FX execution, including what the member is doing in algorithmic trading. 
 
Members of the FXMPG2 (like those in the sister group the FXMPG) are also observing the new US president and his administration to understand the new political and economic environment and its impact on markets. Following up on key projects from 2016, members will compare their bank score cards and how they communicate with their banks about service levels and key aspects of their bank relationships.  
 
Also on the agenda:
 
New hedge accounting exposure draft: In September, 2016, the FASB released an exposure draft on hedge accounting with the aim of making “targeted improvements to the hedge accounting model based on the feedback received from preparers, auditors, users and other stakeholders.” Key goals are to make hedge accounting easier to achieve and account for, and reduce the risk of restatement. 
 
The Options vs. Forwards Decision: A perpetually high-rated topic for many, this session will examine the decision parameters and influencing factors for members when determining which instrument best serves the hedge objective, generally or at any given time. A member recently went through an exercise to review instrument mix in the hedge program, and he will share some of the analysis and conclusions.
 
Lunch with Table Topics: Each table will have a topic to discuss, for example: setting FX objectives and defining success; quantifying and mitigating tail risk; exposure forecasting tools and processes; and trouble currencies update. 
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.
 
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Blog entry
By aorwick, March 02, 2017
This year, look for movements in the foreign exchange markets to be a reflection of more than interest rate differentials, trade flows and other fundamentals. 
 
FX volatility has nearly doubled since the US Federal Reserve concluded the last round of asset purchases under QE3 in 2014, and it may continue its upward trajectory. The new US administration has not fully settled in yet, and there are several significant events on the European political calendar in 2017. Will traditional forward-based hedge programs continue to meet objectives, or will other strategies result in better performance?
 
Anne Friberg, facilitator of the NeuGroup’s FX Managers’ Peer Groups 1 and 2, will return to the EuroFinance Conference on Managing Rapid International Growth to moderate a panel on how politics drive FX. 
 
Sign up here to receive a report on the key takeaways from Ms. Friberg’s panel discussion.
 
The panel will discuss how corporate treasurers think about FX risk and the objectives of the hedge program, especially in light of several large FX shocks in recent years. Plus, panelists from Hedge Trackers and FiREapps will share their input on the complexities of exposure forecasting and hedge accounting, and how they affect the choices put before treasurers. 
 
How should corporate FX risk managers respond to volatility? Can technology and processes combine to give you a holistic view? Look for the panel to offer insight into the nature of today’s FX risks and the strategies on offer. 
 
Ms. Friberg’s panel, entitled “Focus on FX: The Problem of Politics”, will take place at 2:40 p.m. on Thursday, March 2, at The InterContinental in San Francisco, California. 
 
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Blog entry
By aorwick, February 28, 2017
Anne Friberg, NeuGroup Senior Director, will return to the EuroFinance conference on Managing Rapid International Growth to share her thoughts on the nature of today’s FX risks on Thursday, March 2, in San Francisco, California. 
 
In a session entitled “Focus on FX: The Problem of Politics”, Ms. Friberg and three panelists will look at how politics continue to be a key driver of FX rates in many countries. In fact, some moves in the FX markets today have more to do with the state than interest rate differentials or trade flows. 
 
No matter the cause, treasurers have seen a recent increase in FX volatility. With this in mind, the panelists will discuss whether treasurers should keep their forward-based programs in place or consider more exotic products, such as basket options. 
 
The panel will also address the question, “Can a combination of technology and processes give you a holistic view?” EuroFinance Day 2 is focused on how treasurers are using technology to drive international growth. 
 
Joining Ms. Friberg on the panel will be industry experts from FiREapps, Hedge Trackers and Logitech. 
 
If you are interested in receiving our key takeaways on foreign exchange management, including the issues raised on Anne's panel, click here
 
For more information about EuroFinance San Francisco, visit http://www.eurofinance.com/conferences/managing-rapid-international-growth
 
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Blog entry
By jneu, February 27, 2017
Treasurers own more activities at a time when action plans may be needed like never before.
 
When the Treasurers’ Group of Mega-Caps meets next month in New York, they will check in on the changing scope of their roles and responsibilities. It’s an important time to do this because the growing role for treasurers managing activities outside the traditional treasury space. More are wearing multiple job-title hats, makes the coming roller-coaster ride from changing policy consequences all that more challenging. 
 
The shape and implications of the Trump Administration’s tax reform policy agenda, and especially regarding off-shore cash repatriation, will be top of mind. But so will the risks (and opportunities) created as a consequence of President Trump’s wide-reaching economic policy agenda—and the potential backlash from US economic and trade partners. 
 
Thus, the most interesting aspect of the upcoming meeting may be the risk workshops planned to look at scenarios for the dollar, supply chain and related trade finance, commodity prices and the knock-on effects for major developed and developing market economies (and their currencies). For mega-cap multinationals with global footprints, the coming few years may be a roller coaster ride for the ages. Scope creep in tMega members’ roles and responsibilities will only make the ride more thrilling.   
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.
 
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