GLOBAL NETWORK CORPORATE CASH INVESTMENT REPORT 2014

Transcription

1 GLOBAL NETWORK CORPORATE CASH INVESTMENT REPORT 2014

2 CONTENTS SunGard Corporate Cash Investment Report Introduction 2 Executive summary 4 Approach to cash investment 4 Changing cash balances 4 Figure 1. Change in surplus cash balance over past 12 months 4 Surplus cash balances 5 Figure 2. Primary reasons for holding surplus cash 6 Cash investment challenges 6 Figure 3. Most significant cash investment challenges 7 Cash investment strategies 7 Figure 4. Changes in corporate cash investment strategy 8 Asset allocation 8 Figure 5. Asset allocation by instrument 9 Use of money market funds (MMF) 9 Figure 6. Reasons that respondents chose not to invest in MMFs 10 MMF reform 11 Transaction execution 11 Figure 7. Methods of transacting short term investments 12 Figure 8. Methods of FX transaction execution 13 Figure 9. Dealing method comparison 14 Conclusions 16 Appendix A. Respondent profile

3 Introduction Now in its fourth year, SunGard is delighted to present its Corporate Cash Investment Report, an in-depth study among corporate treasury professionals to explore corporate attitudes to cash investment, including strategic cash holdings, asset allocation, investment policies and transaction execution. This year, we have expanded the reach of the report into foreign exchange (FX) instruments and execution, reflecting the integrated nature of treasury policies and processes. Having now built up four years of data, this report uniquely presents not only the findings from the 2014 survey but also identifies trends and developments over time. The study attracted responses from 164 corporations globally, with responses completed during August This included respondents from all regions and industries, with 51 percent of respondents located in North America. Every region was represented in the study, although only one respondent was based in Latin America. Most of these had a centralized approach to treasury management, with 90 percent of respondent organizations having a single global treasury center or regional treasury centers, the same proportion as in the 2013 study. Detailed information on respondents is provided in Appendix A. 1

4 Executive summary CASH BALANCES 49 % Over the past three years, the proportion of companies that have increased their cash balances has grown by 6 percent year over year, from 37 percent in 2012, 43 percent in 2013 to 49 percent in The reasons for holding this cash are changing as market confidence grows. For example, the proportion of companies holding cash to finance capital investment or merger & acquisitions (M&A) increased by 6 percent between , which is likely to be reflected in increased M&A over the coming months and years. Growing confidence is also reflected in the fact that only 11 percent of companies are now holding cash as a buffer against dips in revenue in the future, a fall from 13 percent last year and 17 percent in CASH INVESTMENT CHALLENGES 2014 continues the trend we have seen over the past four years for treasurers primary investment concerns to shift from operational to more strategic issues. This year, given the consistently high, and in many cases growing cash balances, lack of suitable repositories for cash was the greatest concern, noted by 31 percent of respondents. The impact of globalization is very apparent, with trapped cash representing a major issue, noted by fewer respondents. 31 % CASH INVESTMENT STRATEGIES 33 % The proportion of respondents that need immediate access to all cash has fallen from 46 percent in 2013 to 33 percent in 2014, suggesting that treasurers are starting to review and refresh their investment policies. The study also shows an increase in the number of organizations that are able to compromise on liquidity (although not preservation of capital) for certain segments of their cash. The continuing low interest rate (particularly in the Eurozone), improvements in cash flow forecasting and increasing awareness of the impact of regulatory change are all the likely reasons for the decrease of need for immediate access to cash. Treasurers continue to strengthen their investment skills and treasury technology within their departments, putting them better in a position to manage a wider range of instruments. 2 SunGard Corporate Cash Investment Report 2014

5 ASSET ALLOCATION Although treasurers are thinking ahead in terms of future investment strategy, they are not yet actively investing in new instruments. Deposits remain the most commonly used instrument, while money market funds (MMF) remain popular. Variable net asset value (NAV) funds are becoming more popular reflecting the impact of regulatory change to Rule 2a7 funds in the United States. We would expect this shift to become more pronounced in the coming year as new regulations take effect. The 2014 report revealed that 27 percent the corporations are investing in commercial paper; an increase of 10 percent from % TRANSACTION EXECUTION 60 % In addition to gradual revisions to treasury policy, processes are also changing, specifically towards electronic dealing. Although this is the first year in which FX has been included in the study, it would appear that electronic dealing is more common for FX than money market instruments, partly as more treasury departments seek competitive quotes on these instruments. Consequently, independent dealing portals are more commonly used than proprietary systems for FX. For short-term investments, use of electronic dealing remains strong this year at 60 percent, and both proprietary and independent electronic dealing portals are popular half of which are integrated with the treasury management system (TMS). CONCLUSIONS 2014 reflects continuing confidence in a slow recovery, albeit fitfully with some inconsistency across markets. However, there is no prospect of a rise in interest rates, cash balances remain high, deposit lines are often fully utilized and availability of highly-rated, liquidity instruments remains limited, placing companies with cash to invest in difficult position. Consequently, while counterparty risk and liquidity risk remain essential, many treasury departments are starting to refine their investment policies. This is a timely development, and treasurers will need to monitor the changes in the industry as regulations such as Basel III and changes to the MMF industry in the United States (and most likely Europe in the future) mean that the most commonly used cash instruments used by corporate investors: bank deposits and MMFs, will change in the future. While the United State and Europe remain the largest investment markets, there are a variety of solutions in other regions to meet investor needs. These instruments are subject to different regulations, market practices, risk and liquidity characteristics; however, as corporations expand geographically, particularly in markets where repatriation of cash is either infeasible or undesirable, investing outside home markets will become increasingly important. Another impact of globalization is the need to standardize cash and treasury management policies and processes, and maintain visibility over liquidity and risk globally. As transaction decision-making and/ or execution capabilities develop beyond the group treasury center, use of a single integrated treasury technology platform becomes an essential requirement, of which an electronic dealing portal is a vital component. 3

6 Approach to cash investment Changing cash balances Over the past three years, we have seen that a steady proportion of companies have experienced no material change in their cash balances: 37 percent in 2012, 35 percent in 2013 and 35 percent again in 2014, represented in Figure 1. However, overall, there is a strong trend towards increasing cash balances. Over the past three years, the proportion of companies that have increased their cash balances has grown by 6 percent year on year, from 37 percent in 2012, 43 percent in 2013 to 49 percent in Surplus cash balances While it would seem logical for companies to create cash war chests during the global financial crisis, primarily as a buffer against revenue shocks and mitigate liquidity risk, in fact treasurers had already been building up cash balances for some years up until the crisis to fund mergers and acquisitions (M&A) and capital investment, and for working capital reasons. With the most extreme effects of the crisis now behind us, an important question for treasurers is how much cash they actually need, and why? As this study illustrates, companies hold cash balances for a variety of reasons, as shown in figure 2. In the short-term, cash is required for working capital financing (noted by 29 percent of respondents, a fall on the 2013 figure, but the same level as in 2012 study), emphasizing the ongoing importance of working capital management. Over recent years, corporations of all sizes have embarked on initiatives to optimize working capital, such as payables and receivables management, regional and global liquidity programs and alternative financing, such as receivables or distributor financing and supplier financing. Some of these programs are now reaching fruition, which perhaps explains this slight fall. Figure 1. Change in surplus cash balance over past 12 months Decreased by more than 66% Decreased by 33-66% Decreased by 0-33% No material change Increased by more than 66% Increased by 33-66% Increased by 0-33% SunGard Corporate Cash Investment Report 2014

7 The proportion of companies holding cash to finance capital investment or M&A has increased by 6 percent over the past year, from 27 percent in 2013 to 33 percent in This could reflect a gradual increase in corporate confidence, resulting in increased M&A over the coming years. For example, September 2014 showed the highest M&A activity since Growing confidence is also reflected in the fact that only 11 percent of companies are now holding cash as a buffer against dips in revenue in the future, a fall from 13 percent last year and 17 percent in Respondents noted that in some cases, surplus liquidity took the form of trapped cash (i.e. surplus liquidity held in restricted markets that cannot be repatriated easily and/or cost effectively) and, among financial institutions in particular, the need to hold capital for regulatory reasons. Figure 2. Primary reasons for holding surplus cash Protect the business in the event of a fall in revenue Working capital financing Pay down debt on maturity Return cash to shareholders Finance capital investment or M&A Other

8 Cash investment challenges Since SunGard first started conducting this annual study in 2011, treasurers investment challenges have gradually shifted from operational to more strategic concerns. For example, the 2011 results highlighted that corporate treasurers greatest investment challenges were mostly process-driven, with nearly half of respondents highlighting cash flow forecasting as a primary concern. By 2012, market issues had emerged as a stronger priority, particularly the Eurozone crisis and the need to manage counterparty risk more effectively. Regulatory changes such as the expiration of the Federal Deposit Insurance Corporation (FDIC) guaranteed non-interest bearing account scheme and proposed changes to money market fund (MMF) legislation were also creating considerable uncertainty. In 2013, with some of these issues no longer so immediate, treasurers most considerable challenge was finding suitable investment instruments, indicated by 58 percent of respondents. Unlocking trapped cash held in regulated markets such as China (43 percent) was also a major consideration. While market and regulatory issues remained important, these had become less immediate than in the previous year. In 2014, given the consistently high, and in many cases growing cash balances, lack of suitable repositories for cash remained the greatest concern, noted by 31 percent of respondents, more than half of whom identified this as their number one issue (figure 3). Although lack of credit limits with highly rated banks was noted by far fewer respondents (17 percent) clearly these issues are closely linked. Trapped cash remains a major issue, noted by fewer respondents, a similar proportion to the 2013 study. Regulatory challenges, concerns over the future of the MMF industry, risk, visibility and operational issues all remain significant, but these would appear to be less immediate than the problem of how to invest surplus cash. However, with changes to Rule 2a7 funds in the United States now taking effect, investors in these funds will need to consider how forthcoming changes will impact their investments. Figure 3. Most significant cash investment challenges 1st most significant 2nd most significant 3rd most significant Change in investment landscape due to Basel III Lack of automation Changes to investment landscape e.g. proposed MMF reform Lack of suitable investment instruments Concern over risks in Eurozone Inability to access trapped cash Inability to gain visibility over global cash Lack of credit limits with highly rated banks SunGard Corporate Cash Investment Report 2014

9 Cash investment strategies The challenge of finding suitable investment instruments is exacerbated as corporate treasurers are mandated to adopt conservative investment policies in line with their organization s risk appetite. As it is not the business for most corporations to take risks with shareholders money, capital preservation is pivotal to every investment decision, typically followed by liquidity as an equal or very close second consideration, and yield lagging some way behind. As figure 4 illustrates, however, there are noticeable shifts taking place in corporate investment policies. In particular, the proportion of respondents that need immediate access to all cash (i.e. with 100 percent of investment in bank accounts, overnight deposits or MMFs with same-day access to liquidity) has fallen from 46 percent in 2013 to 33 percent in 2014, a substantial change. This would appear to suggest that companies are starting to review and refresh treasury policies. Figure 4 also shows an increase in the number of organizations that are able to compromise on liquidity (although not preservation of capital) for certain segments of their cash. This allows them to invest in instruments with a longer maturity, potentially opening up more investment choices with a higher yield. There could be a number of reasons for this shift, although as noted above, the sample size is relatively small and it will take another few years to identify a more reliable trend: The continuing low interest rate, particularly in the Eurozone, which is now in negative interest rate territory, is prompting company boards to re-evaluate their investment strategy, particularly as the most immediate counterparty risk concerns during the global financial crisis have receded; Many treasurers have invested in more reliable cash flow forecasting so they are better able to segment cash into operating (working capital) core cash (short to medium term) and strategic cash (medium to long term). While security and liquidity remain the most important risk priorities for operating cash, the need for same day liquidity is less compelling for core and strategic cash; Treasurers are becoming increasingly aware of the impact that regulatory change will have on investment opportunities. Of particular note, Basel III will make some (longer term) deposits more attractive to banks than others, while changes to Rule 2a7 funds in the United States and potential changes to MMFs in Europe in the future will impact on investment in these instruments. Consequently, treasurers and CFOs are looking ahead to ensure that their investment policy is flexible enough to adapt to ongoing change. As a result of both the global financial crisis and growing cash balances, treasurers are strengthening investment skills and treasury technology within their departments, so that they are in a better position to manage a wider range of instruments. Figure 4. Changes in corporate cash investment strategy Preservation of capital, immedate access to all cash Preservation of capital, immediate access to some cash, higher yield on strategic cash Preservation of capital and liquidity as required, optimize yield

10 Asset allocation Although treasurers are thinking ahead in terms of future investment strategy and adapting their policies accordingly, they are not yet actively investing in new instruments (figure 5). Deposits remain the most commonly used instrument, noted by 80 percent of respondents, an increase of 7 percent since 2013, although the total amount of cash invested has decreased very slightly from 57 percent to 55 percent. The use of constant net asset value (NAV) MMFs has fallen by 5 percent (from 52 to 47 percent) but companies have invested an average of 50 percent of their cash in these instruments, compared with 44 percent a year ago. In contrast, the number of companies investing in variable NAV MMFs has increased from 9 percent to 15 percent, although for a lower proportion of their total investments (from 44 percent in 2013 to 31 percent in 2014) perhaps reflecting caution as treasurers test the water in their use of a new instrument. Use of other instruments has not changed dramatically since 2013, with the exception of an increase in both the number of respondents, and the proportion of cash invested in commercial paper. The proportion of respondents investing in commercial paper has grown by more than 10 percent in the past year (27 percent in 2014 compared with 18 percent in 2013), to invest an average of 25 percent of total cash. This is potentially an important shift as investors seek to shift their exposure from financial institutions to corporates. Respondents were then asked whether these instruments would be more or less important in the next twelve months. In most cases, instruments that treasurers currently use will remain at a similar level of importance in the future. Instruments in which respondents indicated would become more important in the future were commercial paper, (23 percent) deposits, (21 percent) constant NAV MMFs, (18 percent) and separately managed accounts (16 percent). However, this is a mixed picture given that a comparable proportion of respondents thought that constant NAV MMFs and separately managed accounts would become less important. This may also reflect a somewhat confused picture of the changing regulatory environment, particularly in relation to MMFs. Over time, the use of constant NAV funds will necessarily decrease, certainly in the United States and potentially other markets in the future, as new regulations take effect (see MMF reform below). What remains to be seen is the degree to which corporate investors will wish to transfer to variable NAV funds, or whether they will choose to invest in other instruments. So far, there appears to be a slowly growing appetite for variable NAV funds, which is a reassuring development in that MMFs play an important role for many companies in diversifying their counterparty and liquidity risk, and provide useful repositories for surplus cash in an environment where high-quality investment opportunities are relatively scarce. Figure 5. Asset allocation by instrument % allocation % using instrument Short-term Bond Funds Tri-party Repos Treasury Bill/Notes (Government Debt) Money Market Funds (MMFs) Variable NAV Money Market Funds (MMFs) Constant NAV Floating rate/ variable rate notes Fixed Rate Bonds Deposits Commercial Paper Certificates of Deposit SunGard Corporate Cash Investment Report 2014

11 Use of money market funds (MMF) Nearly half of respondents (46 percent) already use constant NAV MMFs for cash investment, with 18 percent indicating that these instruments were likely to become more important in the future. This is a somewhat confusing finding, and perhaps reflects the fact that regulatory changes to Rule 2a7 MMFs in the United States had only recently been announced when this survey was conducted. However, this indicates that there is a relatively large proportion, 54 percent, of corporate investors, which is a slightly larger figure than in 2013, who are not attracted to MMFs at present. The primary reason for corporate investors lack of interest in MMFs was the relatively low yield on these instruments compared with other investment products, cited by 51 percent of respondents (figure 6). Concerns over liquidity and counterparty risk were also considerable, noted by 24 percent. While in previous years studies, lack of familiarity with MMFs was an obstacle to investment, this is no longer the case; however, the relatively high proportion of respondents that indicated concerns over counterparty risk and liquidity suggests that there is still some way to go in informing the corporate treasury community about the diversified, liquid nature of MMFs. Regulatory uncertainty was also noted as an issue (21 percent). As described below, the MMF industry is undergoing substantial change in the United States, with the potential for similar changes in Europe. However, these changes are aimed to increase the resilience of the MMFs against market shocks, so while change inevitably results in uncertainty, treasurers should consider whether the new generation of MMFs will help them to achieve their investment objectives. Figure 6. Reasons that respondents chose not to invest in MMFs Not familiar with instrument Not available in base/ operating currency Concerns over counterparty risk Concerns over regulations Concerns over liquidity Low yield compared with other instruments Other

12 Money market fund reform On June 23, 2014, the Securities and Exchange Commission (SEC) in the United States approved reforms to MMFs which will result in the shift of Rule 2a7 funds from constant NAV to variable NAV with the aim of reducing systemic risk. This has valuation, accounting, and operational implications for fund managers, and will therefore have a profound impact on the MMF industry. Accounting treatment differs for corporates too, which may require some change to existing systems. Another significant amendment to Rule 2a7 funds will be the removal of credit ratings, which will create challenges for many corporate investors for whom credit rating is a key investment criterion. The new rules were adopted on August 23, 2014, with a two year transition period for the shift from constant NAV to variable NAV, but only allowing 18 months for the removal of credit ratings. In Europe, proposed changes along similar lines have been postponed for the current European parliament but the expectation is that these plans will be reinstated during the next parliament, such that the European and U.S. MMF markets are broadly similar. At the time the survey for this study was launched, there was still some uncertainty about the nature and timing of MMF reforms in Europe; however, the approval of MMF reforms in the United States, and the relatively aggressive implementation timescale, means that corporate investors need to consider the necessary changes to their investment policy. This includes ensuring that treasurers are mandated to invest in variable NAV, unrated funds, and/or that there is sufficient scope to invest in alternative instruments. Respondents noted that deposits, commercial paper and separately managed accounts were likely to be the most likely alternatives or additions to corporate investment policies, but it was clear from the results that many treasurers were not yet aware of the reforms and the implications for the MMF industry. 10 SunGard Corporate Cash Investment Report 2014

13 Transaction execution In addition to determining the choice of investment instrument, the way in which deals are transacted is an essential component of treasury policy and processes. There has been a shift towards electronic dealing for more vanilla instruments (e.g. deposits, MMFs, FX spot and forward transactions) in recent years. Some banks offer proprietary dealing tools, e.g. as part of an electronic banking system, and while independent portals offer multi-bank dealing through a single channel. Although the benefits of electronic dealing are well-established, it has not yet been universally adopted. Figure 7 shows that the telephone remains the most popular dealing method for short-term investments at 36 percent. This is an increase from the 2013 study (30 percent) but this is substantially below the 51 percent using telephone dealing in Both proprietary and independent electronic dealing portals remain popular (29 percent and 27 percent respectively) half of which are integrated with the treasury management system (TMS). For foreign exchange (FX) transactions, treasurers are far more likely to use electronic dealing. 79 percent of respondents indicated that they seek competitive quotes on FX transactions (typically a higher proportion than for other instruments) and as figure 8 shows, multi-bank dealing portals are far more commonly used than single bank, proprietary systems, with 23 percent of respondents using a multi-bank channel for between percent of their FX activities. 23 percent of the respondents never or rarely seek a single quote via telephone dealing for their FX deals. Figure 7. Methods of transacting short-term investments 5.8% Combination 3.6% Other 13.0% Third party portal, integrated with TMS 36.2% Telephone 13.0% Standalone, propriety bank portal(s) 13.8% Third party portal, not integrated with TMS 14.5% Propriety bank portals(s) integrated with TMS 11

14 Figure 8. Methods of FX transaction execution 0 20% 21 40% 41-60% 61-80% % Custodian bank Telephone dealing single quotes & Telephone dealing competitive quotes Online dealing proprietary, single bank system Online dealing multi-bank dealing portal SunGard Corporate Cash Investment Report 2014

15 Figure 9 compares the advantages and disadvantages of various dealing methods in terms of competitive quotes and operational risk management. Seeking competitive quotes allows treasurers to show that they are approaching relationship banks for business, allows them to track bank performance, and demonstrates that they have executed deals at the best price, or if they have not taken the best price, the reasons for this. Choosing the right dealing method is also important in managing operational risk, in particular avoiding the need to input transaction details in a TMS or treasury module of an enterprise resource planning (ERP) once it has been executed, which is resource-intensive and leads to the risk of error. As figure 9 emphasizes, the use of an independent (multi-bank) electronic platform, integrated with a TMS or treasury module of an ERP is the only way to achieve transparent price discovery and mitigate operational risk issues. However, the survey revealed a variety of reasons why companies have chosen not to adopt electronic dealing so far: Wish to maintain direct dialogue with bank(s) to ensure market proximity. In reality, electronic dealing should not pose an obstacle to bank relationships given that most transactions dealt electronically are more commoditized transaction types, while more complex instruments are dealt directly (reflected by 6 percent of respondents who noted that they use a combination of dealing methods). Furthermore, treasurers can focus their banking discussions on market insights and more strategic issues rather than day-to-day transactions. Perceived lack of coverage of all instruments/ counterparties/ funds. With electronic dealing platforms now well-established, the range of cash investment instruments and funds that can be dealt electronically is growing, with an increasing number of banks and fund managers now connected to the major electronic dealing portals. Security concerns. Reputable dealing platforms are designed with the highest levels of security; in addition, transaction execution should always be followed by rigorous back office processes, including approvals, settlement checking and confirmation, irrespective of whether they are dealt by telephone or electronically. Figure 9. Dealing method comparison Industry best practice for telephone and electronic transactions Telephone dealing single quote Telephone dealing multiple quotes Bank proprietary (single bank) system, not integrated with TMS Bank proprietary (single bank) system, integrated with TMS Independent (multi- bank) system, not integrated with TMS Independent (multi- bank) system, integrated with TMS Competitive quotes/price discovery (but difficult to seek more than 2 quotes in small departments, and prone to error) Operational risk management (but rarely done in practice) 13

16 Conclusions The 2013 study reported that although the financial markets remained volatile and uncertain in some markets, there were hints of recovery with the potential for rising interest rates in the future. In 2014, the slow recovery is continuing, albeit fitfully with some inconsistency across markets. However, the prospect of a rise in interest rates is no more immediate than it was 12 months ago in a number of markets, and Euro interest rates have sunk again with Libor now in negative figures. This puts companies that are continuing to generate healthy cash flow, and/or who have more cash to invest as a result of effective working capital strategies, in a very difficult position. Availability of highly-rated, liquid instruments remains limited, while deposit lines with relationship banks are often fully utilized. Since the global financial crisis in particular, risk and liquidity have become the watchwords of many corporate treasury departments. However, while counterparty risk remains a critical element of every company s treasury policy, the extreme risks that marked the peak of the crisis have receded, and many treasury departments have refined their credit policies and invested in risk management skills to equip the company to deal with counterparty risk more effectively. Similarly, while managing liquidity risk remains a priority, many treasurers have developed their systems and processes to improve cash flow forecasting, which makes it easier to segment cash into operating, core and strategic cash. The result is an apparent, although subtle shift in corporate investment policy. Treasurers are becoming more confident in forecasting their liquidity management needs, which in turn allows them to sacrifice same-day liquidity (as opposed to risking return of capital) for portions of their cash in the quest for a higher yield. This is a timely development, and will need to continue, as regulations such as Basel III and changes to the MMF industry in the United States (and most likely Europe in the future) mean that the most commonly used cash instruments used by corporate investors: bank deposits and MMFs, will change in the future. This is not to say that the market is disappearing for either of these investment types, simply that new instruments will emerge to replace existing instruments. For example, banks will still want to attract customer deposits, and will therefore seek to make their investment offerings as attractive as possible, but maturities are likely to change, and potentially become more flexible, to ensure that solutions meet customers liquidity needs while complying with banks liquidity coverage ratios. Similarly, there will be a transition over the next two years in the United States from AAA-rated, constant NAV Rule 2a7 funds to unrated, variable NAV funds. This does not mean that these instruments are less secure, or are less successful in meeting corporate investment objectives: indeed, the reason for these changes is to avoid market contagion, but there will inevitably be a period of uncertainty as both fund managers and investors find their way through a new regulatory environment. 14 SunGard Corporate Cash Investment Report 2014

17 While the United States and Europe remain the largest investment markets, this should not obscure the fact that corporations have investment requirements outside of these regions, and that there are a variety of solutions that exist to meet these needs. These instruments are subject to different regulations, market practices, risk and liquidity characteristics; however, as corporations expand geographically, particularly in markets where repatriation of cash is either infeasible or undesirable, investing outside home markets is become increasingly important. For example, in addition to a range of cash and securities instruments, there is approximately $150bn in assets under management in MMFs in China, with T+1 access to liquidity. In Brazil, there is $60bn in assets under management in MMFs, with T+0 settlement, with funds accessible via multibank dealing portals. As corporate cash balances in less mature markets grow, and the balance of commercial activity shifts away from traditional markets, exploring the investment opportunities for trapped cash, or balances held outside the home markets, will become increasingly important for treasurers. Another impact of globalization is the need to standardize cash and treasury management policies and processes, and maintain visibility over liquidity and risk globally. Corporations operating globally frequently need to define a regional treasury organization within a global treasury framework, or set up satellite offices of the global treasury function. As transaction decision-making and/ or execution capabilities develop beyond the group treasury center, use of a single integrated treasury technology platform becomes an essential requirement, of which an electronic dealing portal is a vital component. 15

18 Appendix A. Respondent profile Figure A1. Respondent company primary industry Respondent company primary industry Agriculture, forestry 1% Business services 4% Chemical 2% Construction and related industries 2% Consumer goods 5% Distributors 1% Diversified 1% Education 1% Electronics / components 1% Energy and Utilities 10% Financial services 19% Food and related products 1% Government 7% Healthcare 5% Industrial manufacturing 9% Insurance 5% Leisure and hospitality 2% Media & advertising 1% Pharmaceutical 1% Real estate 3% Retail 1% Software and Telecoms 10% Transport & logistics 8% Other 2% 16 SunGard Corporate Cash Investment Report 2014

19 Figure A2. Headquarters of respondent companies 7% Asia Pacific 2% Greater China 3% Central and Eastern Europe 29% Western Europe 4% Africa 4% Middle East and North Africa 51% North America 0% Latin America Figure A3. Treasury centralization of respondent companies 51% One global treasury center 39% Group treasury and regional treasury centers 4% Autonomous treasury centers 4% Decentralized 2% Other 17

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