Corporate treasurers predict further US interest rate hikes
More than half of US treasurers expect the federal funds interest rates to increase by year-end, with only 10% saying they expected rates to decrease, according to the 2023 Corporate Treasurer Market Outlook study from Clearwater Analytics.
The study polled over 150 corporate treasurers across the institutional investing space with US$1.5 trillion in collective assets under management. In addition, most said they expect the yield curve to remain the same or become more inverted at year-end.
Two-thirds of respondents are growing or maintaining portfolio levels, as rates now produce meaningful income. Of the 35% that said their portfolios were shrinking, most said that this was due to M&A, which some cited as a buying opportunity in today’s markets.
When asked how the uncertainty in the banking sector in the first half of 2023 has impacted their investment strategies, half of respondents said that they had increased the number of banks holding their cash or investments, half said they had changed the banks holding their investments, half said they had reduced their exposure to debt of the financial/banking sector, while 22% said they had shifted to larger counterparties.
Looking at the extent to which their organisations are incorporating ESG into their investment programmes, only 17% were giving it “meaningful consideration”, with 44% giving it “some consideration” and 16% saying it is “not a consideration” at all.
WhatsApp usage sees SEC charge banks with widespread recordkeeping failures
The US Securities and Exchange Commission (SEC) has announced charges against ten firms in their capacity as broker-dealers and one dually registered broker-dealer and investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications. The firms admitted the facts outlined in their respective SEC orders. They acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of US$289m, as outlined below, and have begun implementing improvements to their compliance policies and procedures to address these violations.
- Wells Fargo Securities, Wells Fargo Clearing Services, and Wells Fargo Advisors Financial Network agreed to pay a US$125m penalty.
- BNP Paribas Securities Corp. and SG Americas Securities have each agreed to pay penalties of US$35m.
- BMO Capital Markets Corp. and Mizuho Securities USA have each agreed to pay penalties of US$25m.
- Houlihan Lokey Capital has agreed to pay a US$15m penalty.
- Moelis & Company and Wedbush Securities have each agreed to pay penalties of US$10m.
- SMBC Nikko Securities America has agreed to pay a US$9m penalty.
The SEC uncovered pervasive and longstanding “off-channel” communications at all 11 firms. As described in the SEC’s orders, the firms admitted that from at least 2019, their employees often communicated through various messaging platforms on their personal devices, including iMessage, WhatsApp, and Signal, about their employers' business. The firms did not maintain or preserve most of these off-channel communications, violating federal securities laws. Certain firms likely deprived the Commission of these off-channel communications in various SEC investigations by failing to maintain and preserve required records. The failures involved employees at multiple levels of authority, including supervisors and senior executives.
“Compliance with the books and records requirements of the federal securities laws is essential to investor protection and well-functioning markets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “To date, the Commission has brought 30 enforcement actions and ordered over US$1.5bn in penalties to drive this foundational message home. And while some broker-dealers and investment advisers have heeded this message, self-reported violations, or improved internal policies and procedures, today’s actions remind us that many still have not. So here are three takeaways for those firms who haven’t yet done so: self-report, cooperate and remediate. If you adopt that playbook, you’ll have a better outcome than if you wait for us to come calling.”
Separately, the Commodity Futures Trading Commission announced settlements with Wells Fargo Bank, Wells Fargo Securities, BNP Paribas Securities Corp., BNP Paribas S.A., SG Americas Securities, Société Générale, Bank of Montreal, and Wedbush Securities, for related conduct.
Regions Bank expands integrated billing and payments for businesses
Regions Bank has announced the latest enhancement to its digital solutions that enable business clients to manage customer billing and communications via Regions Treasury Management. The solution is supported by Mastercard and Nordis Technologies and enables clients – ranging from small businesses to major employers – to streamline electronic bill presentment and payments. Regions clients can already enrol in BillerXchange, which is the bank’s electronic bill presentment and payment solution powered by Mastercard. Further, this solution enables companies to accept online payments and enhance their customer experience.
By enrolling, clients also have access to the patented Expresso customer communications management software, enabled by Nordis Technologies, to create, deliver and track communications to initiate payments from their customers. The client can choose between text, email or print to deliver these communications.
The integrated, omnichannel solution allows clients, ranging from healthcare and professional services sectors to real estate, manufacturing, distribution, wholesale industries and more, to manage the entire lifecycle of accounts receivables from a single integrated platform. For clients not enrolled in BillerXchange, Regions provides the option to use Expresso digital, print production and mail services as a separate add-on solution to meet their communications needs.
Standard Chartered joins AFP DEI initiative
The Association for Financial Professionals (AFP) has announced that Standard Chartered has joined AFP’s DEI Initiative for Treasury and Finance, which introduces treasury and finance careers to college students and early career professionals and helps them further develop their careers.
Standard Chartered will work with AFP to empower students and early career professionals through professional development, skills building, ongoing training and continuous learning.
As part of the initiative, AFP offers grants for its annual conference. In addition, AFP provides employers with resources to bolster their DEI programmes.
“At AFP, we believe that every individual carries a wealth of knowledge and that the treasury and finance profession can only grow stronger by adopting diverse and inclusive business practices,” said Jim Kaitz, President & CEO of AFP. “We look forward to working with Standard Chartered to empower individuals from diverse backgrounds to become the next generation of leaders that will propel the profession forward.”
Dwolla to streamline payment operations for enterprises
Payment services provider Dwolla has announced the launch of Dwolla Connect, an API solution designed for mid to enterprise-sized businesses. This solution aims to simplify the process of replacing legacy, batch-based technology with modern infrastructure, enhancing the management and reconciliation of payments across multiple financial institutions. With Connect’s bank-agnostic approach, businesses can leverage their existing commercial accounts at significant US banks, including JPMorgan Chase and Wells Fargo, to initiate payments.
Building on the success of their flagship digital wallet product, Dwolla Balance, Connect aims to continue transforming the account-to-account (A2A) payment landscape by making it easy to send and receive payments directly from bank accounts.
Dwolla Connect serves a range of industries, such as financial services, lending, banking-as-a-service, marketplaces, and insurance. Its API-first approach is designed to enable businesses to integrate A2A payments into their apps or connect with existing ERP/cash management systems, offering a centralised location for payment information.
Tradeweb and FXall collaborate on workflow solution for local currency emerging market bonds
Tradeweb Markets, a global operator of electronic marketplaces for rates, credit, equities and money markets, has announced it has launched a solution to help institutional investors trade emerging markets (EM) products more efficiently. Developed in collaboration with FXall - LSEG’s electronic platform for global currency products - Tradeweb’s FX Swap Workflow is a multi-asset digital solution linking trading workflows in local currency EM bonds and FX swaps through a single user interface (UI).
The FX Swap Workflow solution allows mutual clients of Tradeweb and FXall to buy or sell an EM bond via the request-for-quote (RFQ) or request-for-market (RFM) protocols on Tradeweb and then hedge the local currency risk by executing an FX swap trade via direct connectivity to FXall. Clients can request prices from multiple dealers simultaneously on both legs of the transaction, helping to achieve better real-time transparency and prove best execution. They should also benefit from existing straight-through-processing (STP) channels, leading to greater automation and time-saving efficiencies.
“Facilitating the connection of our EM bond marketplace with FXall’s liquidity pool provides buy-side traders with access to enhanced and efficient local currency EM trading workflows,” said Enrico Bruni, Head of Europe and Asia Business, Tradeweb. “Clients trading EM products can now take advantage of markets that are increasingly interlinked while also benefitting from seamless execution and STP.”
Morgan Stanley was the liquidity provider for the first transaction using Tradeweb’s FX Swap Workflow solution. Commenting on the transaction, Volkan Dikmen, Managing Director at Morgan Stanley, said: “We are supportive of new initiatives that help markets evolve and become more streamlined, so we are proud to provide liquidity for the first-ever trade bringing together EM bond and FX swap markets.”
Technology and innovation in Singapore’s financial sector receives S$150m boost
The Monetary Authority of Singapore (MAS) has announced that it will commit up to S$150 million over three years under the renewed Financial Sector Technology and Innovation Scheme (FSTI 3.0). This scheme seeks to accelerate and strengthen innovation by supporting projects that involve the use of cutting-edge technologies or with a regional nexus, while doubling down on MAS’ commitment to promote a vibrant technology ecosystem for the financial sector.
FSTI 3.0 will comprise three new tracks. The Enhanced Centre of Excellence track, formerly known as the Innovation Labs track, will expand the scope of grant funding to include corporate venture capital (CVC) entities, at funding support of up to 50% of qualifying expenses, capped at S$2m per project. Given the importance of CVCs in identifying and nurturing the next generation of start-ups, MAS says the funding will enable CVCs to offer strong mentorship and support to help start-ups scale and develop resilient and viable business models.
Through the Innovation Acceleration track, MAS says it recognises the importance of partnering with the industry to support innovative fintech solutions from emerging technologies such as Web 3.0. MAS will conduct open calls for innovative technologies in industry use cases. Grant funding will be provided to support actual trial and commercialisation.
The Environmental, Social and Governance (ESG) FinTech track is designed to spur the adoption of ESG fintech solutions. This track aims to support the development and deployment of projects that address ESG data, reporting, and analytics needs of the financial sector, at funding support of up to 50% of qualifying expenses, capped at S$500,000 per project.
FSTI 3.0 will continue to support advanced capability development and adoption in crucial areas such as artificial intelligence and data analytics (AIDA) and regulation technology (regtech). Specifically, MAS will promote AIDA adoption in smaller financial firms and support the needs of less digitally mature firms looking to acquire regtech solutions. Across tracks, applicants will also be required to devote resources to talent development to strengthen the Singaporean FinTech talent pool.
Garanti BBVA’s fintech subsidiary launches digital assets venture
Turkey’s Garanti BBVA has announced the launch of Garanti BBVA Digital Assets, the first venture of its subsidiary Garanti BBVA Financial Technologies. With a pilot already in progress, the company will initially provide services for the transfer and custody of bitcoin and ether in the crypto assets market.
“Given the interest of our customers to digital assets, we took the decision to form a sizeable team that focuses on developing state-of-the-art blockchain technologies,” said M. Çağrı Süzer, Chairman of the Board, Garanti BBVA Digital Assets. “Within this context, Garanti BBVA Digital Assets, the new venture of Garanti BBVA Financial Technologies, started its activities as the first investment of a bank in Türkiye. Our research shows that customers significantly value trust in their crypto transactions and especially on its storage. Hence, we are happy to launch our Crypto Custody Wallet addressing these real needs.”
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