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Robust Treasury Procedures

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Published: 7th January 2011 by William Webster

How good are your dealing room procedures? What would happen if key members of your team left? Would key knowledge be lost? Read on and find how one clent found a solution.

The Background

Three dealing room teams undertook wholesale market transactions. Some deals were simple others were complex.

In order that a trade correctly entered the dealing system a series of procedures were followed.

Risk management in the front office similarly involved a series of procedures using management information from the risk system.

There were also a series of procedures to provide reporting to group committees including ALCO.

The Risk

The client had identified an operational risk whereby procedural processes were known by individual dealers but in the event they were absent the knowledge was not widely disseminated.

This could lead to procedural inaccuracies in trade input and risk reporting both in the front office and outside. It could also prompt regulatory challenge.

Initial investigation also identified the following weaknesses:

  • Procedural documentation was in multiple locations
  • Some documentation was missing
  • Documentation required updating

The Proposal

It was proposed that the procedures for each treasury team were evaluated, updated, redrafted and replaced as required. The completed information would then be uploaded onto a proprietary information system to improve accessibility. The steps were as follows:

1. Map with each team the scope of their daily dealing processes; this included the products used, the risks they monitored, the reports that were used and the management information that was produced.

2. Review with each team the documentation that currently existed and what was missing.

3. Validate with each team the documents that already existed, whether they were up to date and accurate. Obsolete documentation was updated to explain current procedures, inaccurate documents was amended.

4. Draft and add any missing procedural documents to ensure there was a comprehensive record.

5. Index, upload and validate the completed files onto the information system where dealers can search by topic.

The Outcome

This assignment was completed on time, within budget and it works.

There is a centralised record of procedures. They are searchable by topic and owner. Additions and changes can be made easily. Training guides and relevant sections of the FSA's handbook and the Bank of England codes of conduct have also been included.

When dealers rotate or when key members are absent the procedural policy is readily available. It also provides guidance for new staff dealing with unfamiliar systems and processes. The firm's operational risk has been substantially reduced. Likewise the risk of regulatory challenge.

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