by Nick Jones, Head of Treasury Business Development, Institutional UK HSBC Global Asset Management, and Hugo Parry-Wingfield, Senior Liquidity Product Specialist, HSBC Global Asset Management
Treasurers around the world are approaching a watershed in the way that they formulate cash investment policies and processes. Persistently low interest rates, local and global regulatory and market developments, and changing global cash and liquidity management needs, are placing ever-increasing demands on treasurers. While security and availability of cash will continue to be key investment priorities for corporations, the ways in which treasurers will manage these priorities in the future will undoubtedly change. Consequently, treasurers need to keep informed of global, regional and local investment trends and opportunities, and maintain their investment policies and processes accordingly, in partnership with a trusted asset management partner.
Diverse investment influences
There is inevitably no single factor that is driving change in the cash investment environment; furthermore, these differ within each region and indeed within individual markets:
Globally, as banks progress in their implementation of Basel III before the 2019 deadline, their appetite for different types and tenors of investments will change. This is leading to the emergence of new investment products and more competitive rates for instruments that meet banks’ capital and liquidity requirements. Consequently, investment solutions that may be considered less attractive today may become more compelling and vice versa – indeed there is potential for a disconnect between a company’s need for short-term options to invest surplus cash and a bank’s need for longer-term stable funding.