simplifying regulatory compliance for your fx hedging program

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

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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?

Tom Gavaghantgavaghan@kyriba.com

Jonathan Zeman

jzeman@actualizeconsulting.com

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Thank You For Attending

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