Overview

of
Treasury Operations
Treasury Operations
Treasury is the name for the center of financial
operations within a company.

 A Treasury Operation is concerned with three

main activities:

 Dealing
 Settlement

 Control
Dealing
 It involves the maintenance/development of
Investment Portfolio and utilizes the bank’s
surplus funds for:

 Day-to-day funding requirements

 Funding investments in associated companies

and subsidiaries
 Raising debt to meet capital requirements

 The above jobs are carried out by Front Office

Settlement
The settlement office is responsible for

 Processing payments,
 Issuing confirmations,
 Reconciliation of accounts,
 Custody of securities,
 Systems and accounting and statutory returns.

The above jobs are done by Back Office

Controls
The treasury function takes on the responsibility for
formulating:

 a set of policies and procedures governing the way

in which the bank trades in the various
instruments and the level at which it trades
The role of BACK OFFICE
Key Risks
 Settlement risk
 IT and operation
 Legal/Documentation
 Cost/reputation
Key Risks
 Static Data
 Reconciliations
 Staffing and retention
 Fraud
 Governance
Settlement Risk

 The biggest impact if not the most likely

 The risk that the asset to be delivered is
delivered before the asset to be
received in
exchange is received and the second
never
occurs and the first cannot be undone.
IT and Operation

 the most pervasive risk

 the least easy to quantify
 the lure of STP
 the lure of direct membership of
infrastructure
 the challenge of MIS
Cost/reputation

 Outsourcing as an option

 Implementation of STP as an option

Static Data
 Needs tight control: but who controls

 Needs to be kept up to date

Reconciliation
 Scope
 Frequency
 Intra organization
 With third parties
 Response
 Clear up rates
 MIS
Staffing and retention

 Recruitment within a bank

 Retention
 Training and development
Fraud

 Segregation of duties within back office

 Dual versus triple control
 Correction of errors
 Internal Audit and Compliance
 Incentives
Legal / Documentation
 Covers counterparties, but also customers,
infrastructure systems, service providers
(nostros, custodians)
 Have you contracted with the party you
intended?
 Are the service levels expected fully
documented?
 How often do you review the range and
quality of the service providers?
Governance
 Segregation of Duties
 Role of Middle Office
 Reporting lines
 Location of functions [low value fx,

nostro funding, unadvised receipts,

customer (call) deposits
 Balance sheet management
The End