Corporates change FX hedging due to US election outcome

The US election’s dramatic and immediate market impact, such as the dollar’s largest single-day surge in eight years, has driven many UK and US corporates to reassess their FX hedging strategies, according to the Q3 Corporate Hedging Monitor from MillTechFX. 

The survey of 250 senior finance decision-makers at UK and US corporates in November found that over nine in ten (93.6%) are changing their FX hedging programmes due to the outcome of the election. The most popular moves are increasing hedge ratios (36.4%), which means buying more protection; and extending hedge lengths (46.0%), which means buying protection for longer. This underscores a desire among businesses to secure certainty amid market volatility. 

Since Q2, the proportion of US firms impacted by geopolitics has nearly doubled. UK corporates, meanwhile, are more optimistic than their US counterparts about Trump’s return, with 81% feeling optimistic about its effects on business, compared to 70% optimistic about its effects on the economy in the US.

The biggest factor influencing FX hedging decisions in Q3 was interest rates, which were felt most by UK corporates. UK inflation increased to 2.3% in October, outpacing forecasts due to increases in energy prices and the recently announced budget, causing uncertainty among UK businesses. In contrast, U.S. firms have cited tightening credit availability as their top concern for a second consecutive quarter, reflecting higher borrowing costs and stricter lending criteria. 

 

Esker integrates AP tool with Microsoft ERPs

Esker has announced the expansion of its Connectivity Suite with pre-built connectors that provide real-time integration of Esker Accounts Payable with cloud-enabled ERPs Microsoft Dynamics 365 Finance and Microsoft Dynamics 365 Business Central.

The long-standing working relationship between Esker and Microsoft ensures seamless integration due to the know-how of the Microsoft environment. Esker Accounts Payable provides a single solution for supplier invoice processing - directly into and out of ERPs - to automate, streamline and simplify accounts payable (AP) processes, including invoice verification, approval and mobile user support. 

The communication and collaboration between finance and other departments is also enhanced. Based on Esker customer results, AP automation can help businesses receive and enter invoices up to 65% faster, lower processing costs as much as 60% and improve invoice accuracy up to 99%.

Users can now receive, enter and track supplier invoices directly in Esker without having to switch between software applications. An AP workflow outside of ERP systems delivers better business continuity by ensuring 24/7 access, approval capabilities for those without role-based ERP access, easier training and thereby greater user acceptance. Additionally, operating outside the ERP adds a virtualisation layer for heterogeneous IT landscapes, eliminating the need to reconcile processes across different ERP systems and delivering a consistent and standardised approach to managing AP.

 

Mashreq and BII look to boost cross-border trade across South Asia and Africa

Mashreq has announced a $50m trade finance partnership with British International Investment (BII), the UK’s development finance institution and impact investor. The partnership aims to boost cross-border trade finance in key emerging markets across South Asia and Africa.

The collaboration will provide US dollar liquidity to support the import of critical goods to these countries during challenging economic conditions. It addresses a growing trade finance gap, driven by rising inflation and decreasing investor interest outside of traditional banking.

Under a Master Risk Participation Agreement (MRPA), the BII facility will leverage Mashreq’s network and track record in trade finance. It will further strengthen the bank’s capacity to provide trade finance to clients in West Africa and South Asia, ensuring faster response times and better client support. It will also enable a more targeted origination process, matching opportunities to investor preferences.

Initially, the focus of the collaboration will be on Angola, Bangladesh, Benin, and Ivory Coast, with plans to expand into additional countries over the coming year.

 

SocGen goes live on CLS’s cross currency swaps service

Societe Generale has gone live with CLS’s cross currency swaps (CCS) service. CCS trades have significant settlement risk exposure due to the high value of the initial and final principal exchanges. In addition, settling these trades on a gross bilateral basis results in operational inefficiencies and liquidity constraints.

The CCS service can be used in conjunction with post-trade processing platform MarkitWire to integrate CCS flows into CLSSettlement, allowing participants to benefit from multilateral netting against all FX transactions. This not only optimises liquidity but also reduces daily funding requirements. The values of CCS submitted to CLSSettlement were up 87% year-on-year in Q3 2024. 

The growth in the service also supports the efforts of policy makers and regulators who promote broader adoption of payment-versus-payment (PvP) mechanisms as a means of reducing FX settlement risk and, more generally, systemic risk in the OTC derivatives market.

 

Deutsche Bank becomes strategic investor in Partior

Partior, a blockchain-based fintech for real-time clearing and settlement, has announced that Deutsche Bank has joined its Series B funding round as a strategic investor, bringing the total investment to US$80m.

This marks the close of the second round in Partior’s Series B funding and comes on the heels of the first close led by Peak XV Partners in July 2024 with participation from J.P. Morgan, Jump Trading Group, Standard Chartered, Temasek and Valor Capital Group. With Deutsche Bank’s investment, Singapore-based Partior will further bolster its global reach and scale its cross-border capability, as well as develop and enhance innovative functions like intraday FX swaps and just-in-time multi-bank payments. 

Deutsche Bank’s intention is to join as a euro and US dollar settlement bank on the Partior platform.

"The payments business is currently undergoing an extensive period of disruption, primarily due to the rapid advancement of technology and drive for greater financial inclusion and transparency,” said Patricia Sullivan, Deutsche Bank’s Global Head Institutional Cash Management. “Deutsche Bank, as the largest EUR clearer, is excited to be a leader in this revolution and harness cutting-edge technology to enhance the speed, transparency, and security of payments expected by clients and peers alike.”

 

Bectran partners with GIACT for ACH fraud prevention

Bectran, Inc., a credit, collections and accounts receivable platform, has partnered with GIACT, part of the London Stock Exchange Group (LSEG), to offer protection against ACH fraud for credit departments. 

Many credit departments collect ACH forms on their credit applications. Requests backed by valid bank accounts should represent a lower risk, making decisioning quickly and more confident. Without verification, though, unstable or stolen bank account information can easily pass as trustworthy — garnering quick approvals. 

While such ACH fraud has historically been associated mostly with consumer transactions, more and more scammers have begun targeting B2B credit, lured by the high-dollar transactions and relative ease of ACH forgery. Even departments that do verify ACH may still be vulnerable. Some services use outdated databases to check account funding and standing. Few services include the ability to match applicants to account owners, meaning applications could be approved based on stolen credentials. 

With GIACT, Bectran provides users coverage for account verification and ACH fraud prevention. The partnership gives creditors two layers of account validation. The first verifies each account’s status, indicating whether the account is open and whether it has any risk indicators such as recent returns or insufficient funds notices. The second attempts to authenticate the account, comparing the applicant information with the account owner’s information when available, which can help catch applicants using stolen bank account information. 

Bectran combines these checks and presents them in the credit workflow, aiding departments in protecting their businesses. Bectran automatically flags transactions indicated by GIACT as high-risk and provides a report of GIACT’s findings on each application.