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Regulation

A focus on corporate treasury regulation in 2018

Corporate treasuries have had to adapt to a plethora of new regulatory challenges in 2018. Photography: Claro Cortes IV
Corporate treasuries have had to adapt to deal with a plethora of new regulatory challenges in 2018. Photography: Claro Cortes IV

The increasing workload of corporate treasury regulation in 2018 includes the effects of MiFID II, CRD IV, IFRS 9 and the FX Global Code of Conduct. How can treasurers stay on top of these multiple challenges?


  1. A number of regulatory changes are creating an impact on corporate treasury workloads, including the effects of CRD IV, MiFID II, sanctions and IFRS 9.
  2. The corporate treasury regulation workload is adding to compliance costs and driving the need for solutions to manage regulatory change.
  3. Further developments in corporate treasury regulation include U.S. tax reform and the increased adoption of the FX Global Code of Conduct.

Since the financial crisis, a series of reforms has sought to change how banks and financial markets are regulated, with the goal of ensuring that banking failures cannot bring the system close to collapse once again.

These reforms have led to policies which seek to fortify the balance sheets of banks, decrease the ability of contagion spreading through different financial services, and separate retail and investment banking divisions for safekeeping.

The impact of all these policy reforms has sifted through the banking structure to land on the heads of banking customers, specifically corporations and their management teams.

In this post, we look at some of the core pieces of corporate treasury regulation and industry reform that professionals need to keep on their radar in 2018.

Capital Requirements Directive IV

As a result of the EU’s Capital Requirements Directive IV (CRD IV), corporations will have noticed cutbacks to the amounts banks are willing to lend, and dwindling willingness to take on short-dated deposits.

This is due to changes in the percentage of capital which banks must hold in cash against credit risk, under CRD IV which came into effect in 2014. These capital requirement rates have as much as doubled since the financial crisis of 2008.

They have also led banks to revise the pricing of their products and services, rendering some more expensive, others more affordable.

Thomson Reuters Eikon loans search. A focus on corporate treasury regulation in 2018
Eikon loans search

With access to liquidity products and services from more than 180 leading providers and 2,300 institutional clients, Eikon helps treasurers manage short-term liquidity and optimize the cost of long-term financing.

Discover how we can help provide all the content and analytical tools you need for effective corporate treasury management

MiFID II reporting

The introduction of EMIR and more recently MiFID II at the beginning of this year has also added to the regulatory laundry list corporate treasurers need to keep in check.

The introduction of the regulation has added to the treasurer’s workload by demanding that certain transactions are reported to a central trade repository.

These reporting processes have also contributed to the cost of compliance for businesses.

While the new regulations may be merited for their attempts to reduce risks posed to the financial system from derivatives, the impact on the use of derivatives by banks has trickled down to create an impact on corporations.

Comply with FX derivative trading regulations, MiFID II and Dodd-Frank

Sanctions risk

In a recent webinar we hosted alongside Treasury Today, at least 50 percent of corporations polled said that they had had payments stopped by their banks, likely in connection with extra red-tape imposed by increased sanctions.

A focus on corporate treasury regulation in 2018. Bank payments statistic
Poll results from our webinar, The New Sanctions Compliance Challenge, April 2018

Jesse Spiro, Global Head of Threat Finance & Emerging Risk, noted the heightened risk for companies given the unprecedented rates in which various countries and international bodies are imposing sanctions on each other.

A focus on corporate treasury regulation in 2018. U.S. OFAC sanctions statistic
Source: Our research 2017

Corporations can no longer rely on the outdated sanctions screening technology of banks to manage risk and prevent delays to business transactions. Other sanctions screening technologies are now coming to the fore to fill the gap.

The World-Check Sanction Set is an instrument that treasurers can use to survey the global sanctions landscape to contain the risks in, and delays to, global business transactions.

IFRS 9 accounting standard

The introduction of IFRS 9 — the new accounting standard for financial instruments in IFRS jurisdictions — has also impacted corporate treasurers this year.

Some corporate treasurers, however, have had a choice on which standard to apply in their hedge accounting practices, namely the previous standard, IAS 39, or the new standard, IFRS 9.A focus on corporate treasury regulation in 2018. IFRS Hedge AccountingOf the companies that chose IFRS 9, or were compelled to adopt IFRS 9, organizations who saw the benefits in IFRS 9 hedge accounting seem to have approached its adoption as a multi-faceted change project, rather than a ‘tick-in-the-box’ adaptation of existing processes for the sake of compliance.

In a recent blog post, Pierre Vidal, Head of Trading Desktop (Foreign Exchange), analyzed the opportunities for corporate treasurers in the adoption of the IFRS 9 rules on hedge accounting, before the rules become a regulatory constraint.A focus on corporate treasury regulation in 2018. Three main impacts of IFRS 9 for corporate treasuries

More corporate treasury regulation

Potential U.S. tax reforms may spark a repatriation movement to the U.S. dollar, with companies moving money across to the U.S. This may have an impact on liquidity for corporate treasurers.

Webinar: Why should Corporates adhere to the FX Code of Conduct

The FX Global Code of Conduct is another piece of reform that treasurers will want to keep on their radar, as banks and organizations around the world choose to sign up to the code, and begin refusing to work with partners and stakeholders who have not.

Global Head of Trading, Neill Penney, will be exploring this topic on 1 August, in a webinar: “Why should Corporates adhere to the FX Code of Conduct?

Corporate Treasury solutions you can count on

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