The challenge

Kulicke & Soffa (K&S) has a strong culture of risk management with strict operational guidelines for risk control without compromising operations efficiency. As part of this focus on risk, the treasury team continues to seek innovative, automated solutions to optimise investment and maximise yield. The company’s keen interest in automation was driven by its belief that less manual intervention could eliminate human errors, improve efficiency as well as reduce the time spent on managing daily transactions. In addition, K&S believed that an automated process could lead to the most efficient cash optimisation.

The company faced multiple manual touchpoints in its current cash balance optimisation process. K&S’s treasury department is a very lean team based in Singapore, but it manages the corporate’s global treasury operations as well as its Group Corporate Insurance function.

“Our existing investment process is manual and time consuming – from monitoring balances, initiating transfers, to conducting placement and redemption. This end-to-end manual process also implies potential risk of errors. We have, therefore, always been exploring technological solutions to streamline the operations. Our goal is to have an optimised investment process that could set-up rules and enable ‘auto-invest’ to take place, meeting our strong risk management standards,” explains Lay Perk Toh, Group Treasurer & Head of Corporate Insurance.

The solution

K&S selected a truly automated cash optimisation solution based on rules set by clients which met 100% of clients’ requirements. Technological innovation and a deep firmwide commitment to technology has enabled J.P. Morgan Asset Management to continue expanding the capabilities of MORGAN MONEY – a multi-currency, open architecture trading and risk management platform – and introduce the new ‘cash optimiser’. Advances in technology now allow MORGAN MONEY to execute on a client’s pre-determined rules; and transactions can be executed automatically without any human intervention via API, SWIFT or J.P. Morgan Asset Management’s internal process.

With this rules-based technology, K&S can customise the investment and settlement rules to meet its standards and guidelines. Importantly, K&S only needs to set-up the rules for balance and fund allocation logic once. MORGAN MONEY will then enact rules, and a purchase or redemption order will be placed based on rules and target balance. This solution also allows for ‘auto settlement’ of all trades without the need to manually ‘settle’ the trade. The rule can be adjusted to meet today’s evolving market environments and the changes will be effective immediately. It also provides K&S the option for an additional review to approve new rules, depending on the company’s control policy – meeting various types of business requirements, from companies with simple to complex requirements.

Best practice and innovation

This joint effort reflects both firms’ commitments to technological innovation and partnership to provide solutions. K&S is a well-established company at the forefront of technological innovation, with automation a key part of its own business. The solution reduces daily human monitoring of cash and eliminates the need for manual effort to wire transfer. Overall, the implementation saves 100 man days a year and yields additional investment return of US$1.3m.

K&S has adopted MORGAN MONEY as its major cash investment management platform and utilises it for trading, risk management and reporting on top of the newly added cash optimisation function. The solution can be applied to K&S’s existing multi-currency investment – due to the global nature of its business – including the USD, EUR, SGD and RMB.

Key benefits

• Process efficiencies.
• Return on investment (ROI).
• Increased automation.
• Risk mitigated.
• Improved visibility.
• Errors reduced.
• Manual intervention reduced.