Discriminatory Pricing Practices in Corporate FX
This article is a contribution from our content partner, Just The following is a transcription of our CEO, Anders Bakke’s, recent webinar: How to protect your business from overpaying on FX transactions. My name is Anders Nicolai Bakke, I’m a serial entrepreneur who’s been in the capital market for a long time and is now proud to be the CEO of Just Technologies. My team and I founded Just Financial during the acquisition of our first capital technology platform back in 2017. We wanted to start another business to solve treasury related problems for companies dealing in the FX market. In this webinar, we’re going to be covering the following: I hope you enjoy it and hope to be able to answer some of your questions at the end. Understanding the FX market I want to first talk about how over-the-counter financial markets are opaque and often hard to manoeuvre for non-financial institutions, such as private companies. What we’ve found at Just is that, in any market where you don’t have access to high-quality data, you are at a considerable disadvantage compared to those who do. In the FX space, counterparties are the ones who have access to the true market rates and they have found ways to monetise that disparity. This is a systemic problem within the market: companies are losing value during FX trades and that value is instead flowing into the profit pools of the banks. So how did this systemic problem manifest? Well, let’s take a look at the FX market and its discriminatory pricing practices: The FX market is very efficient as long as you’re on ‘the inside.’ Whether you’re on the inside is determined by how sophisticated you are, how many counterparties and data sets you have access to, and the understanding you have of the FX space. If you do have access to the right data and counterparties, then you can do your own price discovery and see if you’re getting a fair deal on your FX trades. If you don’t have access to this information and your FX provider knows this, then you’re probably being taken advantage of. Businesses (especially those who aren’t directly related to FX) usually only have access to the prices they see from around one to three banks. This is an issue because the fewer counterparties and rates you see, the less you have to compare. It doesn’t help that the rate banks show you is not the real market rate — it’s a rate that’s marked up both from the SPOT component and credit component. Because FX contracts are entered bilaterally (either peer-to-peer or principal-to-principal), banks themselves admit that it is easy for them to make a profit. Suggested reading: To understand more about whether your business’s FX rates and margins are fair, take a look at our article. How margins are structured in the FX market Now that we understand the issue at hand, we can look at how margins are structured in the FX market. Let’s say a large European bank wants to acquire $1 million from the interbank market. They would go to another large European bank and conduct the same kind of currency trade that everyone would imagine. The typical fees they’d pay for this acquisition would be somewhere between $2-10 per million. That $10 per million includes: So the bank pays that $10, and then turns around to find that one of their largest clients (say in the top 1% of flow) also wants to buy $1 million. In this case, the bank knows that this powerful company has the ability to ask 10-15 banks for a quote as they’re probably on an auction platform, or they have a Bloomberg terminal. Given the potential competition, the bank knows that it’s in their best interest to win the deal as quickly as possible, so they mark up the trade to just $50 per million. If the client accepts that fee, then during that entire process the bank has made a decent profit: they themselves paid $10 to acquire the currency from one of the other banks, and then went on to sell that amount for $50, therefore giving them $40 to pocket. But what about the other 99% of their clients who aren’t as large or savvy in the FX market? What about the average importer and exporter? What about companies who just need to trade $1 million in a vanilla trading pair rather than hundreds of millions? Unfortunately, these large banks know that the average company does not have access to enough counterparties to properly take part in FX auctions. They can therefore charge these companies whatever margin they wish. After many years of analysis, Just has determined that the average margin that banks give to businesses is between $200 – $20,000 per million. Compared to the average $10 that banks charge between themselves, we find this to be pretty insane! There is so much value-leakage from the corporate space that goes straight to the banks and it is for this key reason that we decided to launch our business. Why FX knowledge is important We’ve been in the market for a while now and what we’ve seen across our 100+ clients is how easy it is to approach banks for a real conversation on margins — as long as those businesses are armed with data. Why is this information important to you as a corporate treasurer or CFO? The solution This is not a piece about selling a product — it’s about exploring a systemic problem within the market. And the solution to this problem is actually quite simple. In order to protect yourself from overpaying, you need market data. In most cases just having access to non-tradable rates from Google or Yahoo Finance is not good enough. You need a systemic approach that allows you to see your historical exposure, volume, and current hedges so that you can build a case from which you can sit down with your bank. For this purpose,…
Franklin
Building The Network You Need to Own Treasury Career Success
Your professional network is a key pillar of your professional brand and your professional success. Despite all the hype around AI and related technology, soft skills are critical to being a treasury professional no matter where technology takes the treasury profession. There is quite a bit of content around the importance of building a professional network, but seldom, if ever, is actionable advice shared on how to actually do it. This blog will do just that. There are several building blocks that should each be leveraged in building the professional network of any treasury professional: Identifying the people you want in your network within each channel can be done by asking yourself these questions: In terms of how to inspire people to be a part of your professional network: Finally, I want to share several ways to build connections beyond company walls: Stay tuned for the next blog in Managing Your Professional Brand in Treasury series! 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
FXBeacon: Giving Back
This article is written by GPS Capital Markets Years ago, I read the book Rich Dad Poor Dad by Robert Kiyosaki. In the book, Kiyosaki teaches the concept called the “Law of Reciprocity,” where you reap the rewards both tangible and intangible by helping others. This is a concept I firmly believe in and rely on to guide my life. The company I’ve worked at for 22 years and helped build, GPS Capital Markets gives each employee one day a year to give back to the communities where we live. Last week I took advantage of this to deliver almost 19,000 pounds of food to the Utah Food Bank. Over the years I have learned that for me, giving back to others pays much better than anything else I do. Although I love giving to charity, I also believe very highly in education and helping other people succeed in their careers. To this extent, I’d like to point out a few ways to give back that can be invaluable. Influencing beyond the screen Several times a year I guest lecture at the local universities. A few weeks ago, one of my connections on LinkedIn started a new job at PWC and I happened to like his post on LinkedIn. I got this unexpected response back from him, “Thanks, David! I shifted away from core audit to treasury and foreign exchange due in part to your presentation at BYU. Looking forward to the journey!” For me personally, it made my day to see I was influential in someone’s life, to the point that they modified their career trajectory. One of the most recognizable things I do is appear on TV shows like CNBC discussing the markets and what is going on globally. I think this is very uncomfortable, and stressful. But, having spent many years in the FX field, I feel like my knowledge can help others. I’m not so sure that I get much back from this, but I feel obligated to share what I know with others. Today, it’s easier than ever to connect, collaborate, and share parts of ourselves with others. Yet, the challenge lies in how we contribute authentically and meaningfully, especially when sharing our knowledge and resources. Whether we’re mentoring, teaching, or offering guidance, our actions often have a more profound impact than we realize. For example, one LinkedIn connection recently reached out to thank me for influencing his career shift from core audit to treasury and foreign exchange after attending one of my presentations at BYU. Moments like these are a reminder that what we do matters more than we think. However, stepping into the spotlight, such as appearing on shows like CNBC, brings its own set of challenges. Many may perceive this visibility as glamorous, but for me, it often feels stressful and uncomfortable. Despite the discomfort and stress, I continue to participate because I believe my years of experience in the FX field can genuinely help others. It’s not about what I get in return, but rather a sense of responsibility to share what I’ve learned, knowing that even in a public forum, my insights might make a difference. Giving at the heart of GPS When GPS Capital Markets was founded 22 years ago, the goal was to approach business differently. Our mission was to use our knowledge to help treasury clients improve—analyzing, predicting, and responding to markets with precision and agility. My primary focus was ensuring our team had the training needed to guide clients in making informed decisions about managing global exposures. Over time, this evolved into developing tools that provided clients with greater visibility and oversight of their exposures, enabling them to make strategic decisions. It’s remarkable that, even with all the technology available today, achieving this level of clarity remains a challenge. GPS Capital Markets has developed a full suite of International Treasury management tools. These tools help make very complex tasks easy. For instance, our intercompany netting tool allows clients to look at all of their global intercompany invoices, and rather than pay them one wire at a time, they can now send one transfer for their netted total and make book entries for the remainder. Our Balance Sheet hedging tool looks at global FX exposure, and again nets exposures at the parent company, while allowing hedging at the Subsidiary. We don’t charge for these tools; they are designed to make life better for our clients. Then once clients can identify accurately what their exposures are to put together a program to hedge those exposures that suit their specific company’s needs. With most companies, I spend a lot of time getting to know how their business works, and what type of concerns they have. All companies are not equal and can have varying needs depending on their industry and even competitors. From there, I usually put together 3-4 different ideas on ways to implement and manage their currency exposure. Going through these ideas in detail with the client allows them to see that there are many ways to manage exposure and choose the correct one for their situation. So, how does this education and training both internally and externally help me? My clients are loyal and tend to bring business to me even when they move companies. Additionally, if you look at GPS compared to other FX businesses you will see that our client turnover is significantly lower. If we help clients make good decisions, they will pay us back with their loyalty. Want to be more successful and happier in life? Look at what you can do for others first; the Law of Reciprocity will bring you much more reward than what you spent in giving back. 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 to get more information….
Leading through change: Essential leadership skills for Treasurers
Treasurers are more than just the custodians of cash, they’re leaders who guide their teams and companies through times of change. Over the years, having led numerous treasury projects across the globe, I’ve seen that the most successful treasurers are those who adapt, think strategically, and inspire others. Treasury leadership is about more than just technical expertise; it’s about how we manage change and help our teams grow in a constantly evolving financial clime. Here are some of the key leadership skills I’ve found essential for treasurers when navigating change. 1. Adaptability: Embracing and leading change Change is constant in the Treasury, whether it’s shifts in regulation, the rise of new technologies, or market volatility. A great Treasurer not only keeps up with these changes but also leads the way. For example, I worked on a project in West Africa where new regulations forced us to pivot from traditional investment instruments to alternative options. Rather than resist, we embraced the change, learning about new instruments and adapting our strategy quickly. This shift allowed us to continue meeting our goals while staying compliant, ultimately leading to a stronger, more resilient portfolio. Adaptability isn’t just about being reactive to change, though; it’s about leading your team with confidence when things shift unexpectedly. It’s about creating a culture where change is seen as an opportunity, not a threat. 2. Strategic thinking: Looking beyond the numbers For Treasurers, strategic thinking is about aligning financial strategies with the company’s broader business goals, especially during shifts in economic conditions. I led treasury operations for a beverage manufacturing company during a period of rising interest rates. This environment posed challenges, as increased borrowing costs impacted our cash flow, given the significant capital requirements for production, equipment, and raw materials. Rather than passing costs on to customers, we took a strategic approach by adjusting our financial structure to navigate this rising rate clime. We renegotiated terms with our suppliers to extend payment windows, helping us free up cash and reduce immediate financing needs. We also prioritized early repayments on variable-rate loans to minimize exposure to rising interest costs and secured fixed-rate 7-year loans, locking in predictable costs for future expansion. Additionally, we revisited our hedging strategy to mitigate the potential impact of currency fluctuations on our imported raw materials, which could further strain cash flow under high rates. By proactively managing both financing and operational strategies, we were able to protect our margins and continue growth initiatives, even in a high-rate environment. Strategic thinking in treasury means seeing beyond short-term adjustments and making decisions that support long-term resilience and growth. 3. Effective communication: Making complexity simple Treasury can be a complex and technical field, and often, as a Treasurer, you need to explain complicated ideas to people who don’t speak “finance.” Being able to communicate clearly is essential. I once had to explain the nuances of currency hedging to a team of non-financial stakeholders. Instead of speaking the jargon, I focused on real-world examples: how hedging would protect us from price increases in raw materials and help stabilize costs. Clear communication builds trust and alignment across teams. As a Treasurer, you need to make sure that your team, executives, and other departments understand the treasury strategy and how it ties into the company’s overall vision. When everyone is on the same page, decisions are easier to make and execute. 4. Resilience: Staying strong in the face of adversity Treasurers often find themselves at the center of high-pressure situations, particularly during times of financial uncertainty, like during the COVID 19 pandemic. Whether it’s a market downturn or an unforeseen crisis, resilience is key to maintaining control. I remember during the 2020 financial crisis, when liquidity was tight, I was managing treasury for a large multinational. We had to make quick decisions to protect the company’s cash flow. It wasn’t easy, but by staying calm and focused on our long-term objectives, we managed to weather the storm and came out of it in a stronger position. Resilience is about staying steady and making informed decisions, even when things are tough. It’s also about keeping the team motivated and confident in the face of adversity. As a treasury leader, you set the tone for your team in times of crisis, and your resilience will be felt throughout the organization. 5. Technological savvy: Harnessing the power of tech Technology is transforming the treasury function, and as a leader, staying on top of fintech trends is crucial. I recall implementing a new ERP and TMS for a large beverage manufacturing company as the Head of Treasury, I experienced great resistance. We had to raise project champions within the resistance which infiltrated and spread the benefits of the technology. This eventually dismantled the resistance, and people quickly adopted the technology, which led to increased efficiency. Treasurers today need to be open to new tools and systems but should anticipate internal resistance and proactively develop mitigation strategies. Whether it’s leveraging AI for better cash forecasting or using data analytics for smarter decision-making, embracing technology can dramatically improve efficiency and performance. Staying tech-savvy means looking at how new tools can enhance treasury operations and make the business more competitive. 6. Mentorship and team development: Growing future leaders Leading a treasury team means more than just managing processes, it’s about developing people. As treasury leaders, we have the responsibility to mentor and nurture the next generation. I once helped create a mentorship program within my team, where we paired senior team members with junior colleagues to guide them in both technical skills and leadership development. The result? A more engaged, capable, and motivated team that could handle more complex tasks with confidence. Mentoring is one of the most rewarding aspects of leadership. By investing in your team’s growth, you’re not only ensuring the long-term success of the department but also building a culture of leadership that can thrive beyond your tenure. 7. Visionary Leadership: Inspiring the future A great Treasurer doesn’t just manage today’s treasury needs;…
Jessica
Setting up a tech company’s new foreign office
This article is a contribution from one of our content partners, Bound Expanding a tech company to a new country In 2017 I was working for Paxos in New York City. After some back-and-forth with our CEO over the course of 6 months, I agreed to move to London to set up an office and build a team there. Paxos had an office in Singapore, so this wasn’t the first time it had opened a foreign office, but it was the second. 😉 We were working on a big project with some UK partners and I was traveling to London for one week each month anyway–YOLO. There were a million things to figure out when opening up a foreign office. Set up the legal entity. Find a payroll provider. Find and rent office space. Get new employment contracts. Learn the local laws. Get a visa for you and others. There is a lot. One thing that I didn’t think much about personally and the company didn’t think much about either, was how volatile exchange rates could potentially impact salaries. Not thinking about currencies For me, of course, the Post-brexit era wasn’t great on my newly negotiated USD-converted-to-GBP salary. I was negotiating a cross-currency compensation package around this time. I negotiated hard. At first, I was feelin’ good. I paid rent and food in GBP, but all my savings and investments were going back to USD. Then this happened. Feelin’ less good. I took roughly a 15% pay cut in my disposable income. From the job perspective, on the other hand, I was hiring UK staff. UK salaries were looking better and better for our USD-funded startup accustomed to NYC salary demands. We built the headcount up from 1, to 3, to about 25. Talent in the UK looked like a bargain. Then this happened. Now, personally I was feeling a bit redeemed, but our payroll budgets were getting blown out and it looked like the UK-office was overpaying for talent. Felt like I couldn’t win. My personal takeaway Well, that was the lesson. I’m a product manager. I’m not a currency trader. Should I really be surprised that it felt like I was always bleeding from exchange rate movements? If you’re not a currency trader but find yourself trading currencies, reach out to explore how you can use Bound’s app to minimise such losses and risk. Recommended Reading 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.
An Interview with Patrick Kunz, Founder of Treasury Masterminds
At Treasury Masterminds, we’re all about fostering meaningful conversations that inspire growth and innovation in the Treasury space. Recently, we hosted an insightful dialogue between our founder and board member, Patrick Kunz, and an ambitious junior professional, Prakhar Sinha, stepping into the world of treasury. What started as a straightforward interview quickly turned into a dynamic exchange, with Patrick offering seasoned perspectives on the Treasury landscape while also reflecting on the fresh inquiries brought by our guest. In this blog, Patrick shares highlights from their discussion, touching on everything from treasury fundamentals to cutting-edge topics like AI, sustainable finance, and the evolving role of ESG. Readers will gain a behind-the-scenes look at the strategies he uses in assessing treasury processes, aligning with C-suite expectations, and navigating regulatory changes—all essential for a resilient treasury function in today’s complex financial world. We invite you to dive into this conversation and discover practical insights that can benefit Treasury professionals at every level. At Treasury Masterminds, we’re dedicated to connecting and empowering the Treasury community, encouraging discussions that help treasurers adapt, evolve, and succeed. Q.1 Could you please describe your professional experience and progression in the field of treasury management? I have been in Treasury all my professional life. Starting as a cash and Treasury manager for a German multinational. A relatively small Treasury team of 10 and a wider team of 30 Treasury is great to learn fast about a company’s cash flow, financing, and risk exposures. Q.2 Could you elaborate on the framework and methodology you use for conducting treasury assessments? Specifically, how do you evaluate the effectiveness of treasury processes, identify potential inefficiencies, and quantify cost savings through your treasury scan? There is some adaptation to the client i do the scan for but basically a scan focussed on the 3 (potentially 4) pillars of treasury. 1) cash management. QUestions like how many bank accoutns do you have, do you have fill cash visibility. But also what are your cash management costs and are their benchmarked. 2) risk management. What is your FX and IR exposure. And do you understand the dynamics around it. How do you hedge and why ? Risk apetite But also cost of hedging (often a quick saver in a company). 3 financing: does your financing strategy align with comany goals. Does the financing provide enough flexbility? what if market dynamics or company cash flow changes. Derivatives. But also: benchmarking financing costs. Pillar 4 is about technology and automation: what tools can you use to help automate repetitive tasks or what tools can help you increase your treasury information. Q.3 Given your experience with an online FX trading and payment platform, what is your perspective on the current state of the FX market? What key drivers do you believe are influencing FX risk today, and how can organizations effectively manage these risks in such a dynamic environment? The FX market is one of the biggest in the world. Buying and selling currency daily, relating to world trade. If your company has FX risk it is important to manage it. It all starts with determining your risk apetite. Do i want to elimate my FX risk for 100% or is there some room for speculation e.g. hedging only 80%. Not only for speculation but for changes in exposure. Next key question is the hedging horizon. How far into the future do i want to hedge (or do I have relevant information to make a hedging decision). All this can lead to a FX policy which should be applied to in a company with FX risk. Q.4 What are some of the key challenges you encounter when setting up treasury departments and acting as an independent advisor for treasurers? It depends on the company. I always start with asking a CFO; where is your pain in your treasury. Is it acces to capital or is it global cash visibilitiy? it might be FX exposures or changing market conditions. Depending on where the biggest gap is that is the starting point of treasury focus. Build from there. Q.5 What is your approach and mindset when persuading C-suite executives on treasury strategies? How do you ensure your recommendations resonate at their level? A treasury that is in control means that the company has visibility of their current AND FUTURE cash flow. They have back up facilities with their banks if cash flows are lower then expected or when working capital is low. The treasury manages the FX and IR risk and makes sure cash is at the right time and the right place. A good treasury makes sure the CFO can sleep at night and doesnt have to worry about cash and financial risk. Q.6 How do you ensure a strong synergy between the client and interim treasurer, making sure both parties’ expectations align for a successful partnership? align the goals of the asignment up front and keep updating each other during the asignment. Agree on smaller key milestones and keep reporting on them. Create a culture of telling each other if you are not satisfied to keep each other honest. Q.7 Can you share the journey behind TreasuryMastermind.com and how it has evolved? What has been its impact so far? The idea of Treasury Masterminds is an online community and forum where treasurers can come to discuss and talk to each other. Via the forum to post questions (and get answers) and the blogs, webinars and podcasts to get information. Correct information that is independent. Even if it is from content partners it went though a selection process of our team to make sure it is not sales focussed but it is informational or educational. TM is for all treasury levels, both junior and senior. It started as a hobby project but after only 9 months we reach thousands of people a month and added a team of 14 treasurers around us that support the mindset. SO we are here to stay and grow further. Q.8 In a recent conversation with Dominic Lynch, sir, he highlighted a…