A raft of new regulations around the world is changing how treasurers manage cash.

Author: Anita Hawser

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No matter where treasurers are situated in the world, they share similar concerns: mainly, gaining greater visibility and control over their cash to deploy it when and where they want or invest it for higher yields. Yet regional and local market variations in the regulatory landscape can impact treasurers’ ability to perform these fundamental tasks.

For example, treasurers in Europe leveraged the single currency to sweep excess cash balances into a single euro account. But their counterparts in Asia and Latin America have, historically, found it more difficult to set up centralized liquidity pools covering all markets in the region as a result of diverse regulatory approaches and capital controls.

One of the biggest changes in recent years has been the gradual opening up of the Chinese market. “China has gone from being a trapped cash market to one that can now be included in global liquidity and netting structures,” says Victor Penna, head of treasury solutions at Standard Chartered Bank.

Frankie Au, head of renminbi products at Standard Chartered, says the relaxation of regulations in China means excess renminbi in domestic cash pools can now be integrated or swept to a company’s offshore global liquidity pool. “It allows companies to bridge their onshore cash pool with their offshore cash pool,” he explains. Once the cross-border sweeping structure is in place, Au says, it can be used as a cross-border revolving intercompany lending conduit.

So far the cross-border sweeping relaxation applies only to companies that are registered in the Shanghai Free-Trade Zone. However, Au says it is likely to be replicated in other free-trade zones in the country. Corporates located outside the SFTZ can leverage the “pan-China, cross-border cash pool liquidity management scheme” to manage their surplus capital. But Au says doing so comes with a number of conditions. Given the limitations, Au advises companies that it may be better to wait for further easing expected in other free-trade zones.

Penna also points to regulatory efforts in Malaysia and Thailand, which are vying to supplant Singapore as a favored location for regional treasury centers. “There has been liberalization around cross-border transactions for treasury centers based in Thailand,” he says. “Malaysia has made various moves to attract more treasury business as it wants large domestic players to set up treasury centers in their home market.”


Like Asia, Latin America has also historically presented numerous challenges for multinational corporations when it comes to managing excess cash and liquidity. But J.P. Cuevas, head of global transaction services for Latin America and the Caribbean at Bank of America Merrill Lynch, says key markets are now trying to manage more carefully the wave of dollars that has flooded into the region over the past few years.

“Governments have created some restrictions to keep a check on balances,” he says. “I’ve just come back from Colombia, and they still have restrictions that prohibit pooling and netting. Peru is the same thing…. Pooling and netting in some countries remains problematic, and I don’t see any change in the short term.”

Jim Volkwein, Deutsche Bank’s head of trade finance and cash management corporates, Americas, says Argentina remains a challenge in terms of moving cash out of the country because of the uncertain political landscape, with elections scheduled for October.


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