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Simplifying Regulatory Compliance for Your Hedging Program

Many Treasurers report that the accounting complexities required to comply with derivative accounting standards actually inhibit their ability to effectively manage a hedging program. In this 30-minute webinar, we discuss best practices to implement straight through processing for foreign exchange contracts from deal management, through to the hedge documentation, valuations, and automated accounting. If simplification and automation for your FX program is what you are looking for, this webinar is for you.

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Simplifying Regulatory Compliance for Your Hedging Program

  1. 1. Simplifying Regulatory Compliance for Your FX Hedging Program July 28th, 2016
  2. 2. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2 Today’s Presenters Jonathan Zeman Senior Consultant Thomas Gavaghan Manager, North America Pre-Sales
  3. 3. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3  FX Program Management: Procedural elements to managing your FX Program  Valuations: Foundational building block to proper accounting treatment  Derivative Accounting Compliance  Automated Accounting Agenda
  4. 4. FX Program Management
  5. 5. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5 FX Risk Management Processing Collection Classification Aggregation Policy Setting Trade Capture Visibility & Positioning Limits Monitoring Scenario Analysis Valuation & Effectiveness Testing Confirmations Settlements Accounting
  6. 6. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 6  Balance Sheet – Translation & Remeasurments  Cash Flow – Forecasted revenue and expense  Integration = Centralization Exposure Management Collection Classification Aggregation
  7. 7. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 7  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
  8. 8. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 8  Establish and maintain limits  Perform scenario analysis – What if? – Stress testing  Report & Dashboard creation – Internal – Regulatory Middle Office Management
  9. 9. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 9  Collection and integration of auditable Market Rates: – Spot Rates – Forward Rates – Volatility Surfaces  Fair Value Measurements – Transactional & Portfolio valuations  Effectiveness Testing: – Critical Terms Matching, Shortcut, Long-Haul Regression Valuation & Effectiveness Testing
  10. 10. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 10  Electronic confirmation and matching process  Generate & Net settlements  Automated integration with GL Back Office Management
  11. 11. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 11 Best Practices Questions to Ask: Topic Question Front Office What tools are available to easily integrate with my ERP(s), and other exposure tracking tools to track against policies? Middle Office What is the source of my market rates for valuing my portfolio, and how easy is it to document our results for audit? Back Office How do I get the proper accounting entries posted into my GL?
  12. 12. Derivative Accounting Compliance
  13. 13. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 13  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…
  14. 14. Post Trade Environment Automation
  15. 15. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 15  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
  16. 16. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 16 Thank You for Attending! - 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)
  17. 17. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 17 Thank You For Attending facebook.com/kyribacorp twitter.com/kyribacorp linkedin.com/company/kyriba-corporation youtube.com/kyribacorp slideshare.com/kyriba kyriba.com/blog

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