Regulatory Pressures and Risk Management

Corporates now have high rates of straight-through processing and these include the documentation procedures to comply with IFRS and Sarbanes-Oxley. But hasty implementation of compliance solutions has meant that the risk management process has often been neglected.

When buy-side FX trading platforms were launched four to five years ago, they were given only a qualified welcome by treasurers. "We will not implement standalone platforms," was the almost unanimous chorus. The underlying message being that there was little value in automating front-office dealing operations if much-vaunted STP savings fizzled out into a paper trail in the back office. Automation was, of course, nothing new to corporate dealing rooms, but it really only took off when improvements in systems connectivity allowed transaction data to flow across the entire trade life cycle. Although many corporates now boast impressive STP rates, the scramble to standardise and document procedures in preparation for IFRS (international financial reporting standards) and the Sarbanes-Oxley Act (SOX) has found many treasuries' risk management processes lacking - and sophisticated instruments remain unsupported by many of today's technologies.

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