By Bryan Richardson

British treasury technology companies continue to make inroads into the US; MyTreasury is the latest entrant.

It’s not quite the Beatles or the Rolling Stones or even the Animals or the Troggs. But there appears to be the beginnings of new British Invasion, and it’s in treasury technology.

At various conferences over the past couple of years International Treasurer has come across some innovative treasury-related companies relatively unfamiliar in, or new to, the US market. Last year we came across Treasury Management System (TMS) vendor IT2. This year, International Treasurer had a similar experience with money-fund portal MyTreasury, which had a booth at the EuroFinance Conference in Geneva, and in San Antonio with the company making its AFP Annual Conference debut.

As with IT2, MyTreasury also has interesting and innovative features and hails from the UK. Unlike IT2, however, which has been around in various forms for over 20 years, MyTreasury hit the scene less than three years ago after a few years of product development.

It takes a village

MyTreasury was born out of an R&D project funded by the European Commission in 2004. Back then a consortium of parties and stakeholders came together to lend input and support in the development of the portal. The consortium included mid-to-large European firms such as RTL and SAP, large US firms such as Honeywell and HP, the European Association of Corporate Treasurers and financial institutions such as Invesco Aim, ING, Deutsche Bank, JP Morgan and Goldman Sachs.

The objective of the project was to create a better portal mousetrap that would house comprehensive lists of money funds with a more efficient operating infrastructure that supported “straight-through-processing” (STP) for money fund trades. Following a successful evaluation phase the decision was made to look for a way to take the results of the project to market. ICAP, the world’s leading inter-dealer broker came in as a strategic partner. And thus, MyTreasury Ltd. was established in July 2007 and operates as a division of ICAP Electronic Brokering.

The platform was beta launched in Europe in February 2008 with offshore money-market funds and a full launch took place in May 2008. At The NeuGroup’s meeting of the European Treasurers’ Peer Group, two members mentioned their use of MyTreasury’s offerings and had favorable impressions.

Coming to America?

So why the interest in yet another money fund portal, one might ask? First, it has met with strong success in Europe in a very short period of time. MyTreasury has 100 percent of IMMFA money market fund providers live on their platform. Further, since its launch, MyTreasury has attracted over 250 investor organizations with over 500 individual users across the full spectrum of organization types ranging from local governments through small, medium, large and global corporates to financial institutions of all sizes. The company currently has over $20bn invested on the platform—a pretty good record for a company that emerged from nothing less than three years ago.

The second reason for interest is that MyTreasury is bringing its successful model to the US in January 2011 with an initial selection of 10 to 15 funds. It’s moving quickly to include more funds and working with 18 fund providers that hold 92 percent of US money fund assets. Fifteen of them already distribute through MyTreasury’s European platform.

A New Money Fund Portal—Why?

MyTreasury’s business model has several features that differentiate it from other portals like that of Institutional Cash Distributors (ICD):

Direct accounts. Unlike an omnibus trading portal where an investor’s purchase gets lumped in and netted with all other trades in a particular fund, the MyTreasury portal boasts of allowing companies to keep their direct relationships with their preferred fund companies. This is important for corporate investors who care about tracking and optimizing their relationships with their financial institutions. This also became a significant issue during the financial crisis when the Reserve Fund broke the buck and omnibus investors had no direct relationship with the fund companies that held their money. They found themselves at the mercy of the portal company.

It’s just a middleman… The MyTreasury model does nothing except pass trading information between fund companies and their clients. Unlike other portals, there is no requirement for the portal to be authorized to trade on the company’s behalf with your fund companies.

…but it’s also a data collector and risk manager. The portal has several control options including pre-trade compliance that displays an alert if a trader is about to breach a dollar or percent credit limit for a fund, trader limits, second signature option and an audit trail that can recreate the market at the time of a trade for up to seven years. Further, the portal provides an abundance of statistical and holdings information on each fund offered along with a full array of reporting a company’s own holdings within the portal.

It talks to the TMS. MyTreasury has successfully integrated its product with all of the major TMS products including Sungard Quantum, Wall Street Systems (home of former British Invasion system, Richmond) and IT2 at no cost to the user. The portal typically utilizes SWIFT messages to connect to a transfer agent who confirms the trade and then passes it on to the fund company (see chart below). The trade activity automatically loads into the TMS for accounting and other purposes.

More than Money Funds

“For European corporate treasurers, a multi-fund platform for dealing with money-market funds represents great technical progress,” said Francois Masquelier, head of treasury and corporate finance at RTL. “MyTreasury offers for asset management the same standardization, automation and improved security of transactions that we have already come to expect from FX dealing platforms.” It’s “rapidly becoming a requirement for all serious fund investors.”

But MyTreasury’s vision reaches beyond just money funds. By mid-2011, the company expects to include trading for FX, CDs/time deposits, commercial paper and repurchase agreements. Said MyTreasury Founder and Chief Executive Justin Meadows, “Our goal is to be a comprehensive trading portal for all treasury activities.”