Daily trading volumes of treasury securities have grown exponentially in recent years – presently U.S Treasury Securities Trading volumes exceed $500 billion, in their own right.
In the past the sole focus of Treasury Management Solutions was the process of maximising efficiency and automation. In line with this, Straight-Through-Processing (STP) rate was the sole metric used to evaluate treasury management solutions.
With the emergence of new regulatory norms and frameworks, trading risk has come under increasingly stricter scrutiny, therefore treasury management solutions need to have the ability to process risk data to monitor and improve business performance. Treasury solutions should also have the ability to seamlessly integrate various external systems such as liquidity providers and settlement agencies based on the changing regulatory needs.
Financial Institutions are looking for enterprise treasury and risk management solutions, which can streamline their global trading operations and help make insightful decisions for increasing the profitability of their treasury operations. Let us look at some of the challenges faced by these institutions in the area of global treasury management:
- Disparate Treasury Management solutions and instances complicate the management of trading risk
- Requirement of a single cross-asset trading solution which can automate treasury trading activities across multiple asset classes
- Lack of accurate real-time views of global cash positions, which can help in liquidity optimization and management
- Ability to incorporate new and complex products based on changing customer demands and requirements
As treasury solutions need to be configurable to region specific regulations and policies, workflows have emerged as an important area of focus. Treasury Management solutions with configurable workflows ensure that the trading portfolios remain compliant to various trading policies and controls defined in the applications.
On the technology side, low-latency Treasury solutions are being increasingly demanded by banks / financial institutions. Today's treasurers have the need to book deals faster, retrieve position or risk related information faster, and ensure that transaction settlement is streamlined and accurate, with the focus on management on an exception basis, so operations staff can focus on exhilarating the settlement process. Speed of information retrieval and delivery is an area which needs to be addressed by today's treasury solutions.
The trading volumes which need to be handled by Treasury solutions has also increased significantly and in some cases solutions now need to handle volumes of close to 10 million transactions / day. To handle such high trading volumes, solutions need to be highly scalable and stable. This creates a requirement for mission-critical treasury solutions which can run round-the-clock, without any downtime. There is also a requirement for treasury solutions to integrate seamlessly with various upstream and downstream solutions for increased productivity.
All the above mentioned requirements impacting business, operational and technology fronts have emerged as a result of the continuous shift in markets and regulations, and will remain the key drivers in the evolution of Treasury and Risk solutions.