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Industry roundup: 13 May

ARRC releases guide to published SOFR averages

The Alternative Reference Rates Committee (ARRC) has released the Guide to Published SOFR Averages in order to provide market participants - and non-financial corporates in particular - with key information on the LIBOR transition, including how the published Secured Overnight Finance Rate (SOFR) Averages can be used today and what factors market participants should consider before selecting the alternative rate they use. 

"This user-friendly guide provides important clarity on what the readily-available published SOFR Averages are, and how to use them, which is essential for borrowers at this stage of the LIBOR transition," said Tom Wipf, ARRC chairman and vice chairman of Institutional Securities at Morgan Stanley. "With less than a year left until no new LIBOR issuances, the ARRC aims to equip borrowers with the context they need to understand all the different types of SOFR-based loans they can potentially get from their lenders."

The development of the Guide to Published SOFR Averages was informed by a March 2021 survey of members of the ARRC’s Nonfinancial Corporates Working Group, which found that 90% of respondents wanted to be offered SOFR-based rate choices, including SOFR averages that can be applied in advance and in arrears. To meet non-financial corporates’ needs and help inform their LIBOR transition plans, the Guide outlines the various ways that market participants can use averages of overnight SOFR in financial products right now. It also covers the conventions the ARRC has previously provided for using SOFR Averages now, including for student loans, intercompany loans, and securitisations.

The Guide specifically focuses on the New York Fed-published SOFR Averages, and market participants are encouraged to reference the User’s Guide to SOFR for a more exhaustive overview of options for using averages of SOFR.


FinLync secures US$16m to support global expansion

FinLync, a privately held corporate finance fintech, has announced that it has closed on a US$16m equity funding round. Point72 Ventures led the financing and included investments from Nyca Partners, former CFO of Palantir and founding partner of Friends & Family Capital Colin Anderson, and Plaid founder William Hockey.

FinLync aims to bring speed, simplicity and greater transparency and control to finance and treasury professionals globally. The fintech says that its products provide corporates with the infrastructure to unlock more value from their day-to-day operations. This latest funding will support the company’s continued growth, including investment in its technology and expanding the firm’s global reach and executive leadership team. 

By leveraging bank APIs and embedding the technology within the client’s ERP, FinLync enables corporate finance and treasury departments to have greater control and visibility over their data than legacy treasury management systems provide, while benefiting from financial institution-grade security. Equipped with FinLync’s applications, treasurers and finance professionals are now able to experience real-time payment processing, machine learning-assisted forecasting and reconciliation, all on a user intuitive platform.

Companies such as Citrix have chosen FinLync’s technology to integrate their bank and ERP data in real time, and the fintech's global bank partners include J.P. Morgan and Standard Chartered, among others.

"The corporate treasury function has evolved into an increasingly strategic role," said Tripp Shriner, partner at Point72 Ventures. "FinLync is accelerating that change with its unique solution for CFOs and treasurers around the world, and think they have an opportunity to transform this area of financial services. We are confident in the experience and industry knowledge FinLync’s executive team brings to the table and believe in their vision. We believe FinLync is uniquely positioned to make a significant impact on this area of open banking and corporate treasury and we are encouraged by the clients and partners it has secured. We look forward to supporting the business as it continues to expand globally."


Regulatory compliance and efficiency enhancements drive aggressive bank technology agenda in trading and risk function

Although COVID-19 disruptions have temporarily depressed demand for new banking products and business lines, banks are setting an ambitious technology agenda according to a new report from Coalition Greenwich.

For banks in the US, Europe and Asia, mounting regulatory compliance requirements and the need to improve operational efficiency are driving both an expansion of bank technology investment and an increased willingness to embrace approaches such as SaaS and cloud-based modular solutions.

"Banks’ major technology upgrades are directed at remaking the trading and risk systems that run the bank and ensure that banks are in compliance with fast-changing regulations," says David Easthope, senior analyst for Coalition Greenwich Market Structure & Technology and author The Next Generation of Bank Trading and Risk Technology.

To better understand bank priorities for 2021 and beyond, Coalition Greenwich spoke to 30 senior bank executives overseeing various capital markets trading and risk functions, with a focus on their roadmaps and requirements for technology and vendor relationships. More than two-thirds of these executives say their emphasis for the next several years will be simplifying, streamlining and standardising their IT and operations in order to scale their businesses, as opposed to launching new products and business lines.

Regulatory compliance is also a top priority for bank trading and risk technology groups this year and beyond. Bank executives specifically mention Fundamental Review of the Trading Book (FRTB) along with Interbank Offered Rates (IBOR) transition, Markets in Financial Instruments Directive II (MiFID II), and Uncleared Margin Rules (UMR) as the biggest challenges and highest priorities for the next few years.

Other priorities cited by bank trading and risk technology executives in the report are consolidating and streamlining trading and risk platforms, improving infrastructure for data control, continuing the advancement of electronic trading capabilities, enhancing technology strategies for trading and risk and, in one case, a wholesale digital transformation as part of a move to omnichannel banking.


Bottomline and Autobooks partner on digital cash and payments solutions for small businesses

Bottomline and Autobooks have announced a partnership to deliver digital solutions designed to help small businesses thrive. Autobooks’ invoicing, receivables and accounting tools will be combined with Bottomline’s Digital Banking IQ platform, enabling financial institutions to deliver a unified digital experience and a suite of integrated payments and cash lifecycle solutions, purpose-built for small businesses.

The partnership will leverage Bottomline’s digital banking platform and Autobooks’ approach to helping financial institutions attract and retain small businesses, by providing essential back office services and becoming their system of record. The pair say that the collaborative effort will offer banks and credit unions a highly differentiated solution to deepen engagement and grow small business relationships.

"Addressing the fragmentation, friction, and excessive complexity in financial management for small businesses is an enormous opportunity for any financial institution," said Norm DeLuca, managing director, Banking Solutions at Bottomline.   "Collaborating with Autobooks, we’re helping banks address this opportunity and differentiate themselves digitally, with a seamless, end-to-end experience, from account opening and onboarding through banking and payments, and extending more deeply into the everyday financial management operations of small businesses."

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