Treasury Today Country Profiles in association with Citi

TiMS: the aspirin for your regulatory headaches?

Fallen over pot of pills

According to estimates by Thomson Reuters, 60 new financial rules are announced, on average, across the globe every working day. Naturally, treasurers for large multinationals are going to find that staying abreast in such a rapidly changing environment is no mean feat. However, new treasury management system (TMS) functions may ease some of the pain.

Treasury management systems (TMS) are rapidly evolving and much of this technological development mirrors changes in the role of the treasurer. Since the crisis, meeting the various requirements of the tsunami of new regulations and standards across the globe – Dodd-Frank, European Market Infrastructure Regulation (EMIR), and International Financial Reporting Standards (IFRS) 9 – has been taking up an increasing amount of treasury time and resources. But across the market, TMS technology is adapting meet the treasurer’s new requirements, with most of the vendors having announced new software functionalities to help with regulatory compliance over the past year.

“Compliance is obviously very strategic to our client organisations,” says Bob Stark, Vice President of Strategy at Kyriba. The company’s software-as-a-service (SaaS) solution, Kyriba 13.1, has expanded its functionality to help corporate users to comply with important upcoming regulations including, amongst others, the 1st February 2014 deadline for migration to the Single Euro Payments Area (SEPA). The platform now includes SEPA Direct Debit (SDD) mandate tracking, with document storage and linking of mandate to payment instruction. Companies will usually decide whether to opt for a TMS solution in place of a manual one on the basis of how much work is involved, Stark adds. “But in most cases if someone has already invested in treasury technology, the last thing they are going to want is a workaround solution. They expect these solutions to meet their needs for regulatory compliance.”

Kyriba is not the only vendor exhibiting a stronger focus on regulatory functionality. In June, the German TMS vendor BELLIN announced that it had added a legal entity identifier (LEI) for derivatives reporting to trade repositories, to help treasurers with hedging procedures that will become mandatory under EMIR from February next year.

Enrico Camerinelli, a Senior Analyst at the Aite Group, believes these developments may represent the first signs of a new type of TMS emerging – the Treasury Intelligence Management System (TiMS) – something that he has been promoting for a few years. To quickly recap, Camerinelli first spoke to Treasury Today about his TiMS concept in a 2011 interview. The TiMS is premised on the observation that as the treasurer continues to assume the role of “information steward” to the CFO, their expectations of the data they can derive from their treasury systems is growing.

One of the six features of a TiMS that Camerinelli highlighted in the interview is a regulatory ‘spellchecker’, which is automatically aware of any regulations that need to be observed when a transaction is made. “We are seeing what I think will be the beginning of an evolution in the TMS,” he told Treasury Today last week. “You cannot predict when you will need it, but when you have to perform some operation that requires some form of regulatory compliance then the system should know that.”

Camerinelli views the development of TMS software as a natural product of a fiercely competitive market – albeit one which has recently seen a lot of vendor consolidation. Adding new components to help treasurers meet the demands of their ever expanding remit is one of the main avenues left for TMS companies to differentiate themselves from the competition and attract new business. Kyriba’s Stark agrees with Camerinelli that this is the reason for the growing focus on functionality. “It is all around finding new ways to help treasurers with their evolving responsibilities,” Stark says.

One could make the argument that treasury was a lot simpler prior to the credit crisis, he explains. “But a lot of needs have bubbled to the surface since then – liquidity, working capital, counterparty risk and, of course, regulatory compliance have all gained in importance. If you look at all the providers and the press releases around these functionalities, then you are going to find varying things that vendors are focusing on because they are all searching for innovative ways to meet what they believe are the treasurer’s new responsibilities.”