By Ted Howard
Seemingly no sooner had Bloomberg launched its new know-your-customer product than it decided to go in another direction, pulling the plug on its nascent Entity Exchange program. But it’s certainly not the end of the world for those struggling with KYC compliance—there are many more companies involved, as we discuss in the May issue: big established firms as well as up-and-comers developing new systems with fresher technologies.
As most practitioners know, KYC compliance has become an onerous task. Pain for corporates includes repeated, often redundant, requests by banks for information and documentation, as well as difficulty coordinating across regions and time zones. Banks fare no better, facing continued difficulty extracting data from emails or hard copy documents. And all parties suffer from the lack of standardization across banks and the huge investment of time KYC takes, with little or no value added. Bloomberg thus entered into a market ready for relief with a web-based, globally scaled, centralized, secure platform that promised to enable trading counterparties to manage and share client data and documents.
But somewhere along the line, the company decided the effort wasn’t worth it. A spokesman said only that it would close shop in a matter of months. However, there were suggestions in the market that a management shuffle resulted in a product portfolio review in which Entity Exchange and Bloomberg’s Sell-Side Execution and Order Management Solutions unit got the axe. The company is now working to put those resources to core products.
In our Anticipated Exposures section, we note that cyber risk continues as top of mind for many NeuGroup members in the current meeting cycle. Also, there’s a look at Fitch Rating’s revamped short-term debt ratings methodology, which could “result in both pleasant and unpleasant surprises for some corporate issuers.” And treasurers face a major challenge in collecting myriad metrics used to measure treasury’s own performance and provide decision-makers with insights used to make the company more efficient and profitable.
This month features two peer group meeting summaries: NeuGroup’s Tech20 High-Growth Treasurers’ Peer Group (Tech20HG) and the Treasurers’ Group of Thirty (T30). At Tech20HG, member companies are looking ahead—whether it’s to professional goals, bank relationships, tax planning, treasury strategy or supporting the business. At T30, members mulled a new synthetic currency product that lowers borrowing costs, discussed how to avoid being bullied by rating agencies, and weighed TMS benefits.
Finally, the American Financial Exchange, or AFX, which launched in 2015 and has seen rapid growth over the last year, has put forth another alternative to the soon to be phased out London Interbank Offered Rate or Libor. AFX has launched Ameribor, a benchmark produced by facilitating funding between mostly financial institutions and, so far, one large corporate. Although its creators say it will complement the Federal Reserve’s Secured Overnight Financing Rate (SOFR), it has a lot going for it.