FX volatility | The bottom line, a guide by Western Union Business Solutions

David Harvey our consultant managing the role

From Brexit to international trade tensions, recent economic turbulence has highlighted one thing more clearly than ever: risk management strategies have to be in place to protect profits for businesses trading internationally. If you are an FD or fund manager; many hours of expertise are poured into choosing the right opportunities and tracking yields, but if there is an international element to the investment, even a small change in the currency exchange rate can have a significant effect on profit or the value of returns.

With currency rates fluctuating up to five percent in a month last year, volatility is a real threat to any international business transaction. Five percent profit or gains in an investment are hard earned, and can be quickly lost with an unfortunate turn in the exchange rates. The uncertainty exacerbated by Brexit has caused hesitancy to purchase currency with a “wait and see” approach; dealing all FX on spot with their incumbent banking provider. But large swings in rates means that currency volatility and pricing have become higher on the agenda for many; highlighting the need to get the best from a reputable provider. Working to develop strategies based on the unique needs of a business or the requirements of each fund means budgeted levels can be set and protected. If you are trading internationally, you may want to speak to a qualified risk management consultant to consider the following steps:

Understand your exposures
Businesses could struggle to manage currency risk without understanding where exposures exist and reviewing what they currently do to protect themselves from volatility. Start by assessing your goals, risk appetite, and tolerance to volatility. Is there a budgeted level which is used for accounting purposes? Consider, for example, credit needs and payment requirements such as cost of transfers, bulk payments or international routing.

Create a strategy
With an understanding of your objectives, you have the power to start making informed decisions. Identify some goals specific to managing currency risk. These could include defining a target exchange rate for some, or all your exposure. Consider establishing a formal risk management policy to define processes. Select the right risk management tools for your business remembering that one size does not fit all.

Tactics and execution
Once the most appropriate tools have been selected, applying the right trading tactics can mean the difference between success and failure. For a lot of businesses, the strongest strategies often recognise a framework for executing trades at favourable levels while protecting against material risks. It may also be important to review the market and identify recent trading patterns to understand the risks and opportunities available.

Evaluate and adapt your strategy
Just because a policy has been in place for a long time does not necessarily mean it is still relevant in the current market conditions. Monitor your strategy and consider adapting it to identify shortfalls and build on success. Use a platform which can provide thorough and detailed reporting to assist your decision making.

As a provider of cross-currency, cross border payments around the world, Western Union Business Solutions (WUBS) recognises that for a lot of our clients, foreign exchange volatility should be limited as a risk factor. WUBS can offer products which match your strategic currency objectives depending on the needs of your business. In addition, we offer competitive spot rates, optimal routing and cost effective transfers. Our globally leading online platform not only facilitates online payments and bulk upload but can also give real time access to positions and mark to market valuations.

Our 10th edition of our highly regarded Market Insight Report represents the views of over 1,100 professionals, and contains insights from our specialist consultants and key business partners on market and employment trends.

If you’re looking to find out more on salary benchmarking and the motivations driving the modern workforce today, download our full report which contains key contributions from Seddons Solicitors, Women in Fund Finance, Intoo UK & Ireland and Breaking the Silence.

16/09/19
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As we start the final furlong to Christmas and the end of a pretty eventful year, I wanted to give my overview and thoughts on the current state of the UK compliance and financial crime market, taking a positive outlook and working towards what to look forward to in 2021. The current market in the UKWhen looking at unemployment statistics for 2020 it might feel a bit concerning, The Office for National Statistics confirms the estimates for June to August 2020 showing an approximately 1.52 million people unemployed, representing 209,000 more than a year earlier and 138,000 more than the previous quarter. This puts the current unemployment rate at 4.5%, considerably less than most of the other G8 nations and still some of the lowest figures on record. However, despite the UK dipping into a recession, there’s still been plenty of recruitment activity within the governance space, fuelled by the UK’s position as a global financial services hub, with a special mention to the growth of the fintech (the UK has three of Europe’s biggest fintech firms in its grasp). London especially continues to perform well in global rankings for innovation and investability, regularly coming in at the number one spot and continuing to lead the world in forex trading with an estimated $2.86 trillion per day going through London and as such businesses continue to maintain their presence in the square mile. A new way of workingAgile working has never been more prevalent with working from home now firmly entrenched in many businesses cultures, coupled with investment in digital and virtual processes which have been implemented over the last 6-9 months. Within compliance and financial crime our clients have responded well to all changes and have adapted with ease, meaning less need for employees to worry about making too many adjustments or needing to come in to work on a regular basis. Compensation in the compliance and financial crime sectorPositively, salaries and benefits for permanent roles have remained fairly consistent this year although there has been a marked decrease in day rates on offer for contractors with £500 to £700. This is where we have found most businesses comfortable operating in a volatile market. This has also been affected by the anticipated arrival of IR35, which will come into effect in April 2021. Why choose compliance and financial crime? Compliance and financial crime continues to be a popular career choice for school and university leavers, driving the competition for graduate level roles.  We continue to see an increasing number of qualifications available from the ICA, ACAMS and IRM which are being more desirable when applying for a new position. " This is unsurprising given the UK’s position within the world of banking and financial services. It’s also due to the fact that a career in compliance is now possible straight from university, rather than the traditional route through legal or audit.Relocation is high on the agendaWhen looking at available vacancies it’s worth noting that a large number of roles are being relocated to Europe, particularly Benelux. Amsterdam is boasting a strong selection of risk, compliance and financial crime roles, particularly within the attractive Fintech space. However, we know that it’s not simple to uproot from London and move abroad, and there is still high appeal in London for both the employee and company side.Marks Sattin has continued to perform well and above expectation this year. Whilst some businesses have reduced headcount, we have maintained and in some places expanded our existing teams to ensure we can continue to support clients across all locations. We are anticipating a marked increase in the number of hires next year and would love to support you with any future hiring plans. For more information on how we can support you or if you have any other needs you would like assistance with please get in touch.

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As we start the final furlong to Christmas and the end of a pretty eventful year, I wanted to give my overview and thoughts on the current state of the UK compliance and financial crime market, taking a positive outlook and working towards what to look forward to in 2021.

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Marks Sattin's Compliance and Financial Crime Recruitment Manager, recently put together a summary of the FCA near final Senior Managers & Certification Regime rules published on the 4th July 2018. This extensive document is over 400 pages long and describes the key areas of change to be implemented over the next year and a half, with the deadline being 9 December 2019.  The key areas of change: Senior Managers Regime The Senior Managers functions remain the same for the FCA only (not PRA), with the exception of: • SMF18 (Other Overall Responsibility) • SMF7 (Group Entity Senior Manager) • SMF27 (Partner) The functions have been further clarified in their handbook. Certification Regime The FCA have not made any further amendments to the Significant Harm Functions for the FCA, only authorised firms. “Opt up” to an Enhanced Firm Because of the large number of holding groups who have multiple legal entities and companies, the FCA have introduced a process for them to “opt up” on a voluntary basis to become an Enhanced Firm. Even though individually they do not meet the criteria for being an Enhanced Firm, this change will give them the opportunity to be recognised as one. A new FCA Register Currently the register only contains information on Senior Managers and no information on Certified Persons under the Certification Regime. Download the full summary here.

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