The transition from CFO to CVO
The role of the CFO is evolving towards becoming a Chief Value Officer (CVO), emphasizing value creation alongside traditional financial responsibilities. This transformation involves strategic decision-making, fostering innovation, and managing sustainability. CFOs must acquire new skills in communication, technology, and data analysis to remain effective leaders in dynamic business environments.
Franklin
Montenegro and Albania Join SEPA: A Major Step Forward for Payments in Europe
The Single Euro Payments Area (SEPA), a framework enabling seamless euro transactions across member countries, has expanded its geographical scope to include Montenegro and Albania. Announced on November 21, 2024, this significant milestone paves the way for these nations to officially join SEPA’s payment schemes in April 2025. This inclusion marks progress in aligning their financial systems with European Union (EU) standards and advancing their aspirations for EU membership. SEPA and Its Importance SEPA simplifies cross-border payments within its area, enabling citizens and businesses to make and receive euro payments under the same conditions, rights, and obligations as domestic payments. It currently includes EU member states, European Free Trade Association (EFTA) countries, and a few select non-EU territories. Montenegro and Albania’s Path to SEPA Benefits for Treasury and Financial Professionals The inclusion of Montenegro and Albania into SEPA offers clear advantages for businesses and treasury operations: With the schemes set to go live in April 2025, businesses and treasurers in Montenegro and Albania should begin preparing for this integration by updating their payment processes and systems to ensure compliance with SEPA requirements. For more information on this development, refer to the European Payments Council’s official announcements regarding the inclusion of Montenegro and Albania in SEPA. Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
How Freightos moves faster on decisions with real-time cash data and insights
This article is written by Nilus About Freightos The $500 billion global freight market that transports nearly everything we eat, wear, and use around the world remains almost completely offline. Which means that our everyday products cost more than they should. Freightos® (NASDAQ: CRGO) makes international shipments faster, more cost-effective, and reliable, expanding global trade between the people of the world with the largest global digital freight booking platform. Using a combination of breakthrough technology, data, and a platform that spans multiple global logistics providers, importers, airlines, ocean liners, and leading tech players, Freightos Group companies—Freightos.com, WebCargo, and Freightos Data—are making global trade smoother. The challenges 1. Cash management had limited cash visibility and optimization. With five business entities and 15 banks across the globe, Freightos was scaling fast but needed help understanding its cash status across the organization. Creating weekly, monthly, and quarterly reports required a massive team effort. The manual efforts of pulling, parsing, and splitting data from dozens of accounts and payment providers across many Excel spreadsheets took time to produce. As a result, they could not create these reports more frequently, limiting their cash optimization capabilities. 2. Manual preparation of financial reports delayed decision-making. After the cash consolidation process, the Freightos finance team would analyze their cash inflows and outflows and compare their cash to their budget. They usually completed their cash flow analysis and could view their finalized data toward mid-month after closing their books. “This delayed our ability to make key decisions that would impact our cash flow,” said Freightos CFO Ran Shalev. They needed to close this gap to keep up with business decisions and visibility. 3. Siloed work for different business entities delayed daily work. Consolidating all cash data on the corporate level and then distributing the data to each stakeholder was a challenge without a single platform with one source of cash data. With the Freightos finance team distributed by entity and geographical location, a bank holiday in one location could delay one step in the information chain. A local finance manager might have to wait for others to pull their bank information before continuing their daily work. The solution As a global company with extensive coverage of banks and payment processors, Freightos highly values cash flow visibility and management. Partnering with Nilus gives the finance team better tools to deliver this value. Ran Shalev, CFO of Freightos, emphasizes the value of seeing up-to-date cash data in one place, “We can move faster and take key cash management decisions today instead of waiting for hours of manual work from my team. We’re also one step ahead towards closing the books.” The Nilus integrations connect Freightos to dozens of bank accounts and payment providers, saving dozens of hours per month. Unlike traditional software that can take months to implement, Nilus users can start connecting their banks directly on the platform. Shalev highlights, “Suddenly, you have a super easy UI to view cash balances in one place.” Automated alerts update the finance team on cash flow and liquidity. Cash visibility and anomaly detection enable the team to see real-time trends and enhance their financial planning capabilities. The finance team manages multiple entities within the Freightos Group. With Nilus, they can automate their cash management across all their entities, enabling the finance team to see the bigger picture. Yaniv Kalo, Sr. Director of Product at Freightos, describes the solution, “Nilus continuously maps historical inflows and outflows, uses AI to learn the patterns, and recommends required cash movements for employees to take forward.” Kalo continues, “Together with Nilus, we’re automating significant parts of our Treasury management. We can now access one UI with near real-time data and a recommendation engine, leading to more frequent, accurate, data-driven decision-making by the Treasury team and country finance managers.” The tighter control over Treasury operations puts the Freightos Treasury team in the driver’s seat as they scale. “But visibility is the mean and not the end goal,” notes Kalo. He explains, “As a global B2B marketplace, having the right amount, in the right currency, in the right account, at the right time is crucial when you scale, and it is not an easy task. Nilus makes it much easier for our team to collaborate and ensure all accounts are accurately funded and balanced. It saves us time and money on FX, internal yet international bank transfers, late payment fees, and interest-based deposits while maintaining a high standard of full, accurate, and on-time payments to our Sellers.” With Nilus at work, the Freightos team can better support the business as it grows in complexity with real-time data in hand. Working with Nilus benefits Freightos by providing the following: What’s next for Freightos? As Freightos continues to scale, it aims to automate more and more of its financial operations. Next, they plan to reduce DSO (Days Sales Outstanding) by leveraging additional Nilus automation to apply payments to multiple invoices in their B2B workflow, including implementing a direct integration between Nilus and Netsuite. Stay tuned as we partner in Freightos’ journey of better managing, automating, reconciling, and forecasting their financials. More from Nilus Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
ESG Day: Strengthening Partnerships for Sustainability at CTA Continental
At CTA Continental, we understand the critical role our farmers play in our supply chain and the importance of fostering strong relationships with our key partners. With this in mind, we hosted an “ESG Day” on November 13, 2024, bringing together our banking partners to showcase the intensive efforts we’ve dedicated to empowering farmers and embedding Environmental, Social, and Governance (ESG) principles throughout our operations. This event, designed with a focus on (but not restricted to) Compliance Managers, ESG Managers, and Sustainability Agents from banks, offered a transparent view of our initiatives, demonstrating how sustainability is at the core of our business strategy and culture while fostering meaningful dialogue with our financial partners. A Focus on Farmers’ Sustainability A major highlight of the day was our unwavering commitment to farmers’ sustainability. We presented initiatives that: By emphasizing the economic importance of tobacco production in southern Brazil, we underscored its vital role in supporting rural livelihoods and strengthening local economies. Event Highlights Morning Presentations: Factory Walkthrough: Guests—including relationship managers, credit analysts, compliance managers, ESG managers, and sustainability agents—were invited to tour our production facilities. This hands-on experience showcased our innovative processes and commitment to operational efficiency and sustainability. Farm Visits: Strengthening Partnerships and Perceptions The event fostered open dialogue, reinforcing our shared vision with banking partners to drive collective progress toward a sustainable future. Feedback from participants was overwhelmingly positive, with many expressing admiration for our transparent approach and commitment to sustainability. Several banking partners left the event with a renewed confidence in CTA Continental, and some were so impressed that they suggested we make this a yearly event. We are proud of the strong partnerships we’ve built and remain committed to advancing sustainability, empowering farmers, and delivering value to all stakeholders.
Leveraging Emotional Intelligence in Treasury: A Change Management Tool
In today’s world, Emotional Intelligence (EI) skills often seem undervalued, especially as we observe leaders as people exhibiting narcissistic and populist behaviors. Empathy appears diminished amid ongoing global conflicts lacking resolution. Even in business, where pragmatism and long-term focus are paramount, the lines between politics and corporate interests blur, challenging the role of EI. Despite these trends, EI remains crucial for individual success and societal well-being. A deeper understanding of our own and others’ emotions, coupled with actions rooted in this awareness and positive intent, can lead to a more harmonious world. Imagine a Treasury leader – let’s call him John – who is self-focused on his own success, to the detriment of those around him. He views each interaction as a zero-sum game. Would others be willing to collaborate with such a person on labor-intensive tasks, where the Treasury function often plays the role of project manager? Would interaction with such a person help the Corporate Controller – let’s say Clare – overcome her natural resistance to, for instance, the implementation of a Treasury Management System (TMS) that might delay the rollout of a new ERP system? If Clare knows that John typically acts out of self-interest, will she trust him enough to focus on the company’s overall benefits? Will she be open to hearing why the ERP implementation, which directly benefits her function and several others, should be delayed to accommodate the TMS, regardless of how justified the reasons may be? Research shows that EI skills have a significant impact on the success of leaders: These findings hold particular relevance for Treasury leaders, who must operate and lead change in an increasingly uncertain environment. As Treasury professionals, we are entrusted with safeguarding cash and managing financial risks. To do this effectively, we must not only understand and manage our own emotions but also connect with and work collaboratively with others. What is Emotional Intelligence and why are these soft skills so hard? Let’s start with a definition of what Emotional Intelligence (EI) is. As defined by psychologist Daniel Goleman, it encompasses the ability to recognize, understand, and manage our own emotions, as well as the capacity to recognize, understand, and influence the emotions of others. Goleman’s model outlines four key components: These components collectively contribute to effective leadership and interpersonal relationships, highlighting the importance of EI in both personal and professional contexts. These skills fall into the category we typically call “soft skills,” but contrary to their name, they often prove quite challenging to develop. The good news is that these skills are not set in stone. While some individuals may have a better starting point in some areas – or, for a lucky few, most areas – these skills can be cultivated with focus and determination, regardless of one’s background, IQ, circumstances, or other external factors. We have the power to influence and strengthen these skills through intentional practice and effort. First, let’s explore some practical applications of these skills in Treasury, particularly in managing change. Then, we’ll shift focus to how one can assess and improve these skills individually and within Treasury teams. Practical application of EI in Treasury Change Management There are several ways a Treasury leader can leverage emotional intelligence to enhance both their own and their team’s performance. I deliberately avoid the term “manager,” as leadership or influence can be exercised regardless of one’s position within the team or company hierarchy. First, a leader with highly developed emotional intelligence skills fosters a culture of open communication and trust among team members and stakeholders. Such a culture is crucial for the success of any change management initiative, as it ensures that individuals feel heard and valued, creating a solid foundation for collaboration. Emotional self-awareness and self-control enable such a leader to discuss upcoming projects openly, welcoming diverse suggestions and ideas. They can process all types of feedback constructively, recognizing when emotions might trigger a defensive reaction. By managing these responses, the leader ensures feedback is fully considered, ultimately benefiting the project as a whole. Second, emotional intelligence is instrumental in generating buy-in from stakeholders who will be involved in or impacted by planned changes. Organizational awareness allows a skilled leader to assess group dynamics, identify key influencers, and understand their interests. This awareness enables the leader to communicate the project’s importance effectively, emphasizing its benefits not just for the organization but also for individual teams. By addressing the interests of key stakeholders, a leader can significantly boost alignment and commitment. Finally, such a leader inspires and motivates project team members as they navigate the challenges of change. Empathy helps the leader recognize and address the anxieties that naturally arise during transitions, fostering a sense of reassurance. Additionally, skills like a positive outlook and adaptability empower the leader to provide a compelling vision—a “guiding star” that the team can rally around. These qualities also help the leader anticipate and overcome obstacles, ensuring the team remains resilient and focused on achieving their goals. EI skills are not static and can be trained One of the most important things to remember about Emotional Intelligence skills is that they are not static. While we all have different starting points in life, with varying levels of development in EI skills, these skills can be improved over time. Importantly, those with already strong EI often recognize the need to continuously evolve, understanding that there is always room for improvement. To this end, the Emotional and Social Competency Inventory (ESCI), developed by Korn Ferry Hay Group and Daniel Goleman, is an excellent tool for measuring EI skills. It is a 360-degree feedback tool that allows individuals to measure 12 EI competencies, not only by completing a behavior-based self-assessment but also by seeking feedback from those they work closely with—managers, peers, and subordinates. This provides an overall view of one’s EI skills, highlighting areas that may require focused development at a particular time. This test is widely used by corporations and can be customized to align with a company’s values by…
Alexander Ilkun @ clearBox.lv
Beyond the Basics: Why Modern CFO Offices Need More Than a Regular TMS
This article is written by Treasury4 The role of the chief financial officer (CFO) has evolved dramatically in recent years. While the CFO’s primary responsibilities still include accounting, financial planning, forecasting, and compliance, these duties look different than they did just a few years ago—thanks to the rapidly evolving technological landscape. Now, CFOs must be able to use data-based insights to drive strategic decision-making. They must stay on top of the changing (and more complex) regulatory environment. And they must implement more dynamic financial planning and risk management to adapt to various economic scenarios. Put simply, the CFO’s job is more complicated than ever before. While traditional treasury management systems (TMS) were adequate for CFOs of the past, today’s CFO needs more comprehensive, agile solutions to keep up with the demands of modern finance. In this article, we’ll explore how next-generation TMSs can help support today’s CFO. But first, let’s take a quick look at how traditional TMSs are holding CFOs back… Limitations of Traditional TMSs Traditional TMSs served their purpose well for many years, but they come with significant limitations that hinder the effectiveness of the modern CFO’s office. Here are some of the primary ways they fall short: The Modern CFO’s Office: New Demands, New Solutions To address these challenges, modern CFO offices are turning to next-generation financial management platforms, which offer a range of advanced features and capabilities. These solutions include: Key Features to Look for in Modern TMSs So, what should you look for when shopping for a next-gen TMS? Here are the must-have features: Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
Treasury for Non-Treasurers: Sophistication in Solvency Management (Part II-Strategic Function)
Welcome back. In the first part of this article, we explored solvency management within operational treasuries. As a quick reminder, solvency management—keeping an organisation solvent for as long as possible—is a treasury’s primary duty. In this second part, we’ll focus on strategic solvency management, the level most valuable and of interest to non-treasurers. To stay consistent, please imagine once again that you are a key decision-maker at Acme Manufacturing Corporation, a company with a multi-billion-dollar turnover, aiming to establish a value-adding treasury to keep the company solvent through changing business circumstances and as profitable as possible. You’ve already assessed the operational treasury options: A control-oriented treasury might be suitable if your organisation’s context allows only minimal change for now or has a limited openness to delegated financial management. But, for now, let’s assume that conditions favour a more strategic approach. Suppose management and key stakeholders are ready for change and willing to invest in a treasury that not only ensures solvency in a crisis but also generates profit under regular circumstances—much like Amazon Web Services does for Amazon in IT. With support for innovation in place, you decide it’s time to learn more about strategic treasuries and, most of all, about strategic solvency management. Strategic solvency management: Financing optimisation and value-chain financing From the last article: “The six levels of solvency management sophistication are: The strategic levels are “Financing Optimisation” and “Value-Chain Financing”. These two levels are similar and related. Both have reached levels where the organisation can be confident the company will not become insolvent during ordinary and, as far as possible, in extraordinary times. Both prove their worth daily by showing management that their capabilities – those needed to handle a crisis – are strong enough that they produce a profit during other times. The difference between the two is in focus: ‘Financing Optimisation’ level treasuries provide value-adding financing (and associated investments) to the organisation’s internal functions, such as sales and procurement, so that they can deliver the organisation’s products and funding in one integrated offering to customers and suppliers (Cisco Capital, Tesla Financing). ‘Value-chain financing’ level treasuries do so directly with external counterparties, for example, equipment financing functions where the financing arm often finances equipment from competitors and other manufacturers in addition to their own (Caterpillar Financial Services, Siemens Financial Services). A ‘value-chain financing’ treasury is a separate line of business that includes a ‘financing-optimisation’ level treasury within it and has, in addition, an externally-facing salesforce and other departments needed by the function to operate standalone. Benefits of strategic solvency management The benefits of a strategic approach to solvency management are far beyond what operational treasuries offer. Beneficiaries Many non-treasury departments can become more effective by hiring skilled treasury professionals and putting them in a well-structured, controlled treasury environment. These include: And potentially more. All at the same time. For these levels of treasury function, it doesn’t matter which internal departments or external parties need what. If it’s related to cash flows and their associated implications, it’s what strategic treasuries know about and manage. It’s their bread and butter. Of course, these treasury functions must do more than receive requests passively and process them mindlessly. As strategic partners, they must understand the details of these requests and provide their customers with insights into potential consequences such as unforeseen costs, uncovered risks and missed opportunities. Benefits A strategic solvency-focused treasury provides departments with the following advantages: In other words, the ability to tailor cashflows associated with offerings to whatever the client counterparties want. Examples of flexibility in action Imagine, for instance, that the sales team wants to offer a client financing to purchase expensive machinery. To compete effectively, they might want to keep the price unchanged while the client considers the offer. They might also like to provide flexible payment schedules or adapt to a custom payment plan asked for by the client. The more options treasury can offer, the more likely sales will win the deal. Another example could be when treasury works alongside procurement to negotiate with suppliers where the relationship is vital, but the purchasing power is on the suppliers’ side. Treasury can support procurement in exploring options with the suppliers, such as paying them in their preferred currencies or including interim stage payments. Treasury can support procurement to maintain and even deepen these strategic business relationships. Of course, sales and procurement could do this without treasury’s help. But they are not financial market experts. The risks of them getting it wrong, creating losses and harming their key relationships would be more likely. Such flexibility is invaluable in dealings with external customers, suppliers, employees, and sometimes even tax authorities. Even though market conditions fluctuate and rates vary constantly, non-treasury functions can give their counterparts whatever financial certainty they desire. Naturally, there’s a cost associated with this flexibility. However, organisations typically charge a smaller uplift for financing that’s directly tied to their core business compared to third parties like banks. Acme Manufacturing can do the same. Associated costs and infrastructure OK, fine, the benefits are substantial – What about the costs? When factoring in cover for absences, staff turnover, handovers, and project needs, the scope and costs of a strategic treasury are substantial. Acme must approach this intricate treasury function’s structuring, implementation, management and ongoing support with great care if it is to succeed. Organisational Structure A sound organisational structure is vital to a strategic treasury’s stability, health and longevity. Non-treasurers need to understand the internal structures of these functions to see if they will be suitable long-term partners for them. Base components Given the complexity and similarity to a bank’s needs, it’s not surprising that successful strategic treasuries adopt organisational structures similar to those in banks. Key roles within a strategic treasury include: Salespeople-Equivalents: These specialists liaise with internal and external clients. Their role is to understand clients’ needs, advocate for their interests within the treasury function, and translate their requirements into words other treasury colleagues understand. Examples: Traders-Equivalents: These market specialists work directly…
Nicholas
Crafting a Compelling LinkedIn Profile
Your professional brand matters, and the pillar of that brand is your LinkedIn profile. Type your name into any search engine and the first result will be your LinkedIn profile. and your professional success. This blog shares 10 dimensions that define the impact, or lack thereof, that your LinkedIn profile plays in communicating your value within and beyond your profession. This graphic says it all: If you are less of a visual person, here are the ten dimensions of LinkedIn profile success with more color: In closing, I want to share a trick I use to keep my LinkedIn profile compelling, look at the profiles of your peers and “borrow” ideas from those profiles that really resonate with you. Here are ten LinkedIn profiles in the treasury arena that have manage to catch my eye: I have gotten some kudos about my LinkedIn profile as well that you can see HERE. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
Ernie Humphrey
The 6 hidden FX costs every fund manager should know about
This article is a contribution from our content partner, MillTech In our newest blog post, we are highlighting some of the costs associated with FX execution and hedging that fund managers should be aware of and rank them in order of transparency. FX Execution Costs Execution costs are often the first thing fund managers will reference when speaking about FX costs. Think of a bank as a currency wholesaler, who will then discount away from their wholesale rate to incorporate a profit margin or ‘spread’ when they quote their clients. The spread will be impacted by various factors including, but not limited to: In theory, this cost should be easier to monitor and manage than all the other costs in this list. However, in practice, and even to this day, many fund managers cannot say explicitly what they are being charged. One of the best ways for a fund manager to understand their current execution costs is by carrying out regular Transaction Cost Analysis (TCA) via an independent specialist. TCA is to FX execution what an audit is to annual accounts – third party analysis ensures that your FX counterparties are not ‘marking their own homework’. Forward points Forward points arise in certain FX risk management products such as forward contracts or FX swaps and are a universal market cost that is largely influenced by the interest rate differential between two currency jurisdictions. Forward points can be negative or positive, and may be to the hedgers’ favour or detriment, depending on which currencies are being bought or sold. Nothing can be done to avoid forward points, but fund managers should understand that the forward curve isn’t always linear. The tenor of a hedge can be altered to take advantage of a non-linear forward curve in certain circumstances such as when the trade expiry date doesn’t need to match a pre-defined exit date. Any spread that is incorporated into a forward rate, or the far-leg of a swap, can be monitored using TCA, in much the same way as other Over The Counter (OTC) FX products. The Cost of Cash Drag If you’re a fund manager who hedges FX risk using products such as swaps, forwards or non-deliverable forwards, then you may have experienced first-hand a hidden cost of hedging that isn’t often spoken about – the cash drag associated with placing margin. When placing a hedge, a bank may request cash collateral (initial margin) to be held as security until the hedge matures and is settled. Further, movements in the FX market may result in more collateral (variation margin) being requested, to cover the new mark-to-market of the hedge. If a funds’ investible capital is held back for initial margin, variation margin, or contingent liquidity to cover potential variation margin requests at short notice, then deployed capital must work even harder to hit the target internal rate of return (IRR). It’s almost impossible to know, with any degree of certainty, where FX markets will move and to forecast total margin requirements throughout the life of a hedge – this means, that on day 1, it’s impossible to forecast how placing margin will impact a funds’ investment returns. For this reason, fund managers tend to seek out uncollateralized hedging facilities with each of their FX counterparties with a view to freeing up investible capital. However, hedging on an uncollateralized basis might introduce additional costs that are built into the exchange rate in the form of a credit valuation adjustment (CVA). Credit Valuation Adjustment (CVA) If a fund manager successfully negotiates uncollateralised hedging facilities with their counterparty banks, they should be mindful of the potential for additional FX charges when hedging. Uncollateralised hedging means that the executing bank is taking additional risk on a client when they hedge. After all, that bank has no security against that hedge and in the event of a client default the bank could potentially face a mark-to-market (MTM) loss. CVA is an adjustment in the FX rate to account for the possibility of default. CVA is not zero when FX hedges are collateralized, but it is heavily negated when compared to uncollateralised hedging. CVA will vary from bank to bank, for different clients and might be influenced by prevailing market conditions. This means when a fund manager is executing a longer-dated trade that induces CVA, they can’t know exactly what their hedging costs will be in advance. Although, generally speaking, as the tenor of a hedge increases, so does the potential mark-to-market loss and, therefore, the CVA charge. In order to maintain FX transparency and cost control, fund managers could explore using shorter trade tenors (e.g. 6-months or less) that don’t incur CVA. Historic Rate Rollovers (HRR) HRRs have been around for a while but get a mixed reception from different global regulators and are not generally considered best practice. The appeal of HRRs for fund managers comes from the fact that in theory there will be no cash movements that might normally arise from rolling FX forwards. Standard practice is for any mark-to-market (MTM) gain or loss to be crystallised at each roll date and for the fund manager to receive or instruct a cashflow accordingly. Instead, with HRRs, the single FX counterparty that holds the current hedge incorporates any potential MTM loss into the new hedge rate and the hedge ‘roll’ is performed ‘off-market’. It’s the FX equivalent of kicking the can down the road. HRRs should be considered more of a lending product than an FX product, because any accrued MTM losses are subject to a lending rate being applied to them before the new, off-market hedge rate is decided. HRRs are not considered best practice for the following reasons:: Fund managers should pay particular attention to the discretionary nature of continued access to HRRs every time a hedge is rolled forward, because it relies entirely on the credit appetite of the FX counterparty. HRRs are at their most valuable to a fund manager when they carry a significant MTM loss in…