Latest corporate treasury survey by the Association for Financial Professionals (AFP)

Topic: Business Commentary

An interesting article today, highlights the role and increasing responsibilities that treasury groups have within corporations. They are the head of 'Risk', which includes a wide range of areas. Based on this survey, the key areas of concern or opportunity are displayed below:

The number 2 key area is Currency/Volatility Risk, from both a concern, but more interesting, as an area of opportunity. It is well recognized the managing currency risk for any corporation that has international exposure is a very important level of concern. What is interesting is that treasury teams are starting to look at their currency exposures as an opportunity as well. We here at Overlay Capital are introducing a more dynamic way for corporations to think about FX, and treat it as an asset that can be looked at as a potential revenue stream.

The dynamic approach includes understanding a clients cash flows on a per currency basis, and utilizing the FX swap markets to generate yields that differ on a country by country basis. With short term yields near zero percent in a lot of major countries, cash management has been limited to the accounting and operational aspects of the business. We are allowing clients to expand their thinking and start to maximize yield while maintaining all accounting operations intact. The Private Equity world are having difficulty deploying their war chest of capital into smart investments. They have been exploring and investing a portion of their 'excess' or 'idle' capital into credit opportunities to get a bump up of yield, over their normal purchase and rolling of treasury bills. We are now in discussions with CFO's at these funds to discuss allocating a portion of the cash holdings into our Overlay Capital Trading Program, along with our Adaptive High Yield Product.

We anticipate this interest expanding and look forward to releasing more articles that will explain this process in more detail. 

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