I want my money to work for me
Strategizing
Never keep all your eggs in the one basket. Well, fund pooling seems to defy the logic for at least temporarily consolidating funds at a global centre. A global treasurer or an investment manager would like to have a global view of their cash positions to be able to finally park funds in high yielding O/N deposits or long term notes based on the gaps. Conserving cash and dumping it in low yield current accounts has long lost its sheen and treasurers are rather forced to churn out new strategies to make money work for them.
Globalization or borderless world; whatever we may call it, opportunities are galore in this world. Low interest rates in the West cannot stop investors from looking to the East. Investing in a high interest rates regime in Eastern markets makes a lot more sense than keeping money in low or negative yield current accounts. Who is stopping the Banks from the East from borrowing money at much lower indexes in the West? Converting high cost loans to USD or EUR makes a lot of business sense even after paying the forward premium. That's where simply managing cash differs from managing it with agility and efficiently, and profitably..
Agility and Intelligence
Remember those old docile treasuries where the money market desk and FX desk used to sit poles apart and would not even talk to each other. This is an absolute felony in today's context. Both the markets are so tightly integrated that ripples in one will surely impact the other. Be it an inverse relationship between forward premium in FX and bond yields or a direct relation between FII inflows and currency movements, living in isolation is far from acceptable. An arbitrage window that is created by such movements can only be exploited by those who are abreast of Global Markets and keep a constant watch on the market pulse. All said and done, it does involve lot of agility and sophisticated tools to efficiently manage treasury operations. Given the complex nature of operations and high expectations from treasury operations, treasurers are always in a quandary. Amidst calculating the cost of funding and managing risk, treasurers depend on real time information to take decisions swiftly and accurately. Simple mathematics of matching outflows with inflows is just not acceptable either by investment managers (linked to huge bonuses) or by CEOs (target of increasing topline). Right from understanding technical charts to macroeconomic indicators such as the inflation index, CPI and PPI numbers, employment data, intelligence driving technology is the key. Treasurers need to explore new ways of managing money and they do need decision support systems and analytical tools to enable agile decision-making. Technology has proven invaluable for market research and to develop mathematical models. There is also increased focus on leveraging technology to manage risk and regulate markets. Intuitive dashboards, complex pricing, structured deals, VaR calculations are all being driven by technology.
Conclusion
As stakes run high in global treasuries and the investment banking space, no one wants to leave anything to assumption. How to make more money and make money work on its' own is a challenge and not everyone except for few like George Soros can master it. Highly qualified investment managers, quants, risk managers and state of the art technology is what defines modern treasuries. Need of the hour is is to convert the crisis into opportunities and not simply watch haplessly.
Never keep all your eggs in the one basket. Well, fund pooling seems to defy the logic for at least temporarily consolidating funds at a global centre. A global treasurer or an investment manager would like to have a global view of their cash positions to be able to finally park funds in high yielding O/N deposits or long term notes based on the gaps. Conserving cash and dumping it in low yield current accounts has long lost its sheen and treasurers are rather forced to churn out new strategies to make money work for them.
Globalization or borderless world; whatever we may call it, opportunities are galore in this world. Low interest rates in the West cannot stop investors from looking to the East. Investing in a high interest rates regime in Eastern markets makes a lot more sense than keeping money in low or negative yield current accounts. Who is stopping the Banks from the East from borrowing money at much lower indexes in the West? Converting high cost loans to USD or EUR makes a lot of business sense even after paying the forward premium. That's where simply managing cash differs from managing it with agility and efficiently, and profitably..
Agility and Intelligence
Remember those old docile treasuries where the money market desk and FX desk used to sit poles apart and would not even talk to each other. This is an absolute felony in today's context. Both the markets are so tightly integrated that ripples in one will surely impact the other. Be it an inverse relationship between forward premium in FX and bond yields or a direct relation between FII inflows and currency movements, living in isolation is far from acceptable. An arbitrage window that is created by such movements can only be exploited by those who are abreast of Global Markets and keep a constant watch on the market pulse. All said and done, it does involve lot of agility and sophisticated tools to efficiently manage treasury operations. Given the complex nature of operations and high expectations from treasury operations, treasurers are always in a quandary. Amidst calculating the cost of funding and managing risk, treasurers depend on real time information to take decisions swiftly and accurately. Simple mathematics of matching outflows with inflows is just not acceptable either by investment managers (linked to huge bonuses) or by CEOs (target of increasing topline). Right from understanding technical charts to macroeconomic indicators such as the inflation index, CPI and PPI numbers, employment data, intelligence driving technology is the key. Treasurers need to explore new ways of managing money and they do need decision support systems and analytical tools to enable agile decision-making. Technology has proven invaluable for market research and to develop mathematical models. There is also increased focus on leveraging technology to manage risk and regulate markets. Intuitive dashboards, complex pricing, structured deals, VaR calculations are all being driven by technology.
Conclusion
As stakes run high in global treasuries and the investment banking space, no one wants to leave anything to assumption. How to make more money and make money work on its' own is a challenge and not everyone except for few like George Soros can master it. Highly qualified investment managers, quants, risk managers and state of the art technology is what defines modern treasuries. Need of the hour is is to convert the crisis into opportunities and not simply watch haplessly.
