Corporate treasurers are turning to electronic FX trading in ever-greater numbers. According to recent research by Greenwich Associations, more than a third of corporations now trade FX online. That proportion rises significantly among the worlds largest companies, the majority of which use electronic FX platforms FXall alone counts more than half the S&P 100 among its client base. The principal drivers for electronic FX trading have remained constant corporations and other market participants are still looking for faster executions, convenience, efficiency, increased productivity and better controls. However, as treasurers become more accustomed to executing straightforward spot, swap and forward trades online, they have begun to look for other areas where online foreign exchange platforms can contribute to their business. This article focuses on two areas which are high on the agenda for many treasury departments enhancing control and compliance, and centralizing treasury operations.

Control and compliance new drivers for online trading Over the past few years, there has been an increase in the number of treasury departments making the move to online trading either solely or primarily because of control and compliance requirements. New accounting and corporate governance requirements, including Sarbanes Oxley and IAS 39, have put pressure on treasury departments to increase transparency and internal control. This has had implications for every stage of the foreign exchange trading lifecycle, from execution through to post-trade reporting. Many organizations have found that the best and most efficient way to meet these challenges is to streamline financial processes through automated trading and treasury management systems.

Automating for Sarbanes Oxley compliance
Sarbanes Oxley, which requires companies to test and document internal financial controls, has been the impetus for many corporations to adopt online trading and implement straight-through processing between their treasury management systems and the trading platform. This has two main advantages where internal controls are concerned. Firstly, straight-through processing reduces the number of controls. Deals are automatically uploaded for execution and details of completed trades flow seamlessly back into the in-house system, eliminating all unnecessary manual intervention. Secondly, electronic controls can be monitored and documented automatically, reducing both time and the risk of error.

In addition to implementing straight-through processing, many corporations are tightening internal controls by introducing maker-checker rules, so that every trade requires at least two people to be involved one to input the trade, and another to approve it. For example, FXall offers full support for role-based permissioning. QuickOMS enables users to split the trading function into three separate roles order builder, order approver and order executor. Users are also assigned unique user IDs to enforce segregation of duties between front and back office. Each ID is enabled only for front office (QuickFill, QuickTrade, QuickOMS) or back office (Settlement Center) services, meaning that no one person can perform both functions.