Nordic Financial Systems (NFS), the provider of technical and business integration services to the treasury industry, today announced that its E-Deal Router (EDR), initially developed to offer foreign exchange execution to corporate clients via their treasury management systems, is playing an instrumental part in enabling treasuries to cope with the added operational complexities resulting from IAS39 compliance.
One of the biggest impacts of IAS39 is on hedge accounting. Prior to IAS39 treasuries could aggregate all hedges internally and net out the currencies, resulting in a limited number of hedges being performed externally with banks. Treasuries complying with IAS39 must now execute all hedges with a bank, significantly increasing the number of transactions and the workload of central treasury. If these hedges are managed by manual input into Excel or a treasury system, which is often the case, the growth in volumes is unmanageable without additional headcount or changes to systems and procedures.
NFS' EDR acts as a middleware tool facilitating straight through processing of hedge transactions. EDR's 'intelligent order routing' functionality enables treasuries to send hedges directly from their Treasury Management System (TMS), via EDR to an FX portal or direct to the bank, removing the need for manual entry and eradicating operational risk. Confirmation is then sent back from the bank via EDR to the TMS. The transactions from which the hedges have resulted are stored within the organisation, maintaining a high level of security.
Magnus Lind, CEO, Nordic Financial Systems, comments, "We are delighted that EDR is proving to be such a useful tool for corporate treasuries. Increased use of technology is imperative if all treasury operations are to comply with the complexities of IAS39 without exposing themselves to increasing levels of operational risk."