Internal and technological challenges were cited as one of the main barriers to corporate treasurers adopting cash flow at risk (CFaR) hedging policies, according to a new survey from Bloomberg. More than 100 corporate treasurers, financial analysts and risk managers responded to the poll, which Bloomberg says found that CFaR and earnings at risk (EaR) […]
For many corporate treasurers, deciding what products to use in order to hedge their FX exposures is the easy part of the job. The hard part is working out exactly what their FX exposures are. Galen Stops reports.
When it comes to effectively hedging FX exposures, it seems that the biggest challenge facing corporate treasurers is simply getting an accurate view of what these exposures are.
“Getting a centralised view of our FX exposures is very difficult. It’s always an issue, it’s something that we work on constantly and we’ll probably never get to the point where we have a perfect view on this,” says a source at one European corporate with revenues over $22 billion.
The European Association of Corporate Treasurers (EACT) has today launched a register for corporates adhering to the FX Global Code (Code).
Since its drafting phases, the EACT has supported the Code, which was published in May 2017, and is a set of principles that aims to promote a robust, fair, liquid, open, and appropriately transparent market for all market participants.
The EACT’s register is intended for corporate treasury departments that are participating in FX markets as end-users. The EACT register is included in the Global Index of Public Registers.
In total, 70% of corporate chief financial officers (CFOs) said that their company suffered reduced earnings in the last two years due to avoidable, unhedged FX risk, according to a global survey of 200 CFOs and nearly 300 treasurers.
In the survey, conducted by HSBC and FT Remark, 58% of CFOs in larger businesses said that FX risk management is one of the two risks that currently occupy the largest proportion of their time, while 51% said that FX is the risk that their organisation is least well-placed to deal with.
Meanwhile, 72% of treasurers said that FX risk management is one of the most important aspects of their job and 53% said that they expect changes in FX regimes and regulation to materially impact their risk management strategy in the next three years.