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Analytics: first step to effective treasury STP.

Most corporate financial departments are broken into silos, and many different technologies are required to improve the effectiveness of cash position, manage risk, improve data speed and accuracy and ensure compliance. Institutions need one integrated solution to handle complex instruments/structured products and analytics tools together. In addition to the increasing need for cross-office straight-through processing (STP), achieving competitive gain in today's financial markets is becoming reliant on access to independent price and risk information at high speeds.

Treasury departments have a mix of systems: automated, partly automated and manual processes, all charged with completing a task while complying with corporate governance and regulative reporting. Variation in process execution and technology leaves a company at risk of inaccuracy in procedures and audit controls.

By embedding consistent analytics as the foundation to back-, middle- and front-office activities, the corporate treasurer can eliminate disparate processes and system inaccuracies. Automated access to a quantitative analysis platform from project inception to settlement is a more reliable, secure and profitable approach to transparent procedures and data reporting. More and more, analytics for cross-asset derivatives pricing and risk management are found within best-of-breed treasury solutions.

Because of the need for independent analytics to flexibly create structured products and exotic derivates, advanced analytics are becoming a must-have complement for trading and risk technology systems. As new consolidated technology emerges, market speeds accelerate and financial instruments become more complex, the corporate treasurer will look to gain competitive advantage through technology tools that automate compliance and improve efficiency.

Increased Performance, Profitability

Valuating complex instruments and structured products is time-intensive and, in many cases, a cobbled effort of manual processes and Excel spreadsheets. With a unified full-cycle solution, corporate treasurers can rest easy knowing that external and internal models and methods (fixed income, credit, equity, foreign exchange) are validated in-house to ensure a clean and accurate corporate portfolio. An in-house analytics platform provides the unique flexibility to structure deals from vanilla to the most complex without the burden of hundreds of hours in lost labor and error scans.

Because investment decisions in the financial world rely on speed and decimal point accuracy, corporate treasuries need complex technology that simultaneously speeds and simplifies investment decision information. By embedding the power of analytics within de-facto treasury systems, consistent and accurate information is available, faster. Through the execution of accurately and quickly priced complex instruments within the derivatives market and by arming staff with one place to go for pricing and risk management information across multiple asset classes for all instrument types, treasury departments increase performance and profitability.

High speeds, a competitive landscape and profitability models have dramatically changed the notion of efficiency within the corporate treasury department. As corporations struggle to transform operations and improve execution strategy, STP is becoming a tactical necessity.

Operational Efficiency

Because the cornerstone of operational efficiency within the corporate treasury is the rate at which financial instruments can be priced and assessed for risk, organization-wide access to a consistent analytics platform is key. The system-to-system and manual-to-automated translation step is eliminated, allowing for quick deployment of new instruments and an increased time to market. The complexity of derivatives and structured products via an Excel spreadsheet or counterparties is no longer a barrier to organization efficiency and gain.

As treasurers face the challenge of achieving organization-wide straight-through processing, an analytics platform needs to be at the base of all systems to handle complex instruments, structured products and quantitative analysis. The result: more accurate pricing, a better picture of risk and a scenario valuation model for in-house instrument calibration.

Investments in consolidated projects aiming to align IT eliminate redundant applications, and as corporate treasurers work to stretch shrinking IT budgets, operational efficiency continues to be top of mind. The front-to-back office integration of analytics empowers firms with a single source of information to drive treasury activity and trade execution.

Success in the corporate treasury is reliant on quick, smart decisions; by leveraging STP across the back-, middle- and front-office areas, firms can create and maintain a competitive edge. The combined firepower of analytics, in-depth expertise and consolidated treasury technology is the new industry standard in financial technology and corporate treasury execution.

Steve O'Hanlon is COO of NumeriX, a specialty provider of analytics for designing and valuing derivatives products across various asset classes. He can be reached at 212.302.2220.
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Title Annotation:treasury
Author:O'Hanlon, Steve
Publication:Financial Executive
Date:Dec 1, 2006
Words:721
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