Centralized in-house FX management sounds great, but has limits
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement
Foreign Exchange

Centralized in-house FX management sounds great, but has limits

Boosting the role of corporate treasury by enabling it to centralize group-wide FX management may sound appealing, but implementation and cost challenges should not be underestimated.

Illustration: iStock

Banks have historically described in-house FX management as a difficult and expensive exercise for corporates. Managing currency exchange across multiple business units poses notable challenges for treasury teams.

But Kantox, a BNP Paribas-owned fintech that sells currency management automation software to corporates, reckons it has addressed this issue by integrating the FX operations of subsidiaries with head office to create a central treasury function that can approve or reject internal FX transactions above preset amounts or else based on tenor or currency pair.

Perhaps the most interesting aspect of this offering is how it will impact trading volumes for the leading FX banks – including BNP Paribas itself, which acquired Kantox last year.

Antonio Rami, co-founder and chief growth officer at Kantox, says that maximizing intra-group exposure netting could result in less FX volume traded with banks. He uses the example of two euro-centric subsidiaries with opposite FX exposures, one purchasing $10 million of raw materials, the other exporting $8 million of finished goods.

Antonio Rami, Kantox

“Traditionally, both exposures would be independently hedged with external trades,” he says.

Gift this article