STANDARDS AND REGULATIONS IN TITAN

 

In a world of stringent accounting requirements, strict regulation of derivatives and rising market volatility, companies seek independent pricing and valuation tools for their liabilities and derivative portfolios as an alternative to bank’s end-of-month reports, without transparency on the financial model used and with sometimes unexpected results.

Accounting standards and regulations define the disclosure rules for certain types of transactions and events in financial statements and provide reporting and accounting guidelines. No matter how well-versed they are, the complex regulatory landscape can be the bane of a treasurer’s or CFO’s life. As reporting requirements increase in complexity and frequency, our method and tools are a vital aid for treasurers.

We help you to ensure that your company stays abreast of regulatory developments and remains compliant with accounting rules. We perform a detailed evaluation of your needs and requirements, as we know that each client is different.

Our sophisticated titantreasury solution is flexible enough to meet all your requirements. But you remain in in control to decide on the analyses, tests and reports you need, while we provide the muscular financial market expertise and access to high-level valuations and market data.

 

IFRS / EMIR / BASEL 3 / MIFID 2

 

International Financial Reporting Standards (IFRS) are the international accounting standards set by the International Accounting Standards Board (IASB).
The process of replacing the previous International Accounting Standards (IAS) with IFRS began in 2000 and the two are sometimes confused.
The number 1 aim of these standards is to provide a uniform set of international accounting procedures as a source of global comparative information.


IFRS 7

IFRS 7 officially came into force on 1 January 2007 for periods commencing on or after this date.

Under the standards, companies must report quantitative and qualitative information on how they manage their main risks:

  • Credit risk
  • Liquidity risk
  • Market risk


The disclosures in the financial statements give information on which risks arising from financial instruments a company is exposed on the reporting date and the extent of these risks.



titantreasury offers the expertise, analysis and simulation tools to prepare and issue disclosures on:

- Income, expenditure, profit and loss information;
- Accounting policies;
- Hedge accounting (type of hedges, etc.);
- Fair value (companies are required to give the mark-to-market valuation of each category of financial assets and liabilities for comparison with their carrying amounts, with a few exceptions).

 

 

IFRS 9

The notion of hedge accounting emerged as the use of financial instruments and derivatives by companies and credit institutions increased.

When IFRS 9 was issued to replace IAS 39, companies had to conduct a detailed review of their hedge accounting policies and procedures.
Many have gradually moved away from a hedging risk model to a new and dynamic approach to risk management.

 

It can be a challenge for treasurers to manage the requirements of IFRS9, while optimising hedging strategies and limiting the impacts of hedge accounting. Titantreasury provides an integrated solution to meet these challenges through our module configured for IFRS9 strategies.

How titantreasury helps with IFRS 9 compliance.

The solution is designed to be flexible so you can model your strategies according to your auditors’ recommendations.


  • Regulatory reporting:

    Reporting of “accounting impacts” with a rich array of functions: effectiveness testing for IFRS hedging relationships, storage of calculation results, measurement of IFRS accounting impacts, calculation the accounting impacts under other less stringent frameworks ;
    Reporting of IFRS restatements to switch entries from local GAAP to IFRS ;
  • Ability to manage layering;
  • Managing hypothetical collars as part of optional strategies;
  • Option to create a hypothetical derivative directly in titan;
  • Managing the basis effect;
  • Mark to Market and basis input originally used for IFRS accounting entries;


...and much more.

 

IFRS 13

After six years of discussion and work, the IASB and FASB jointly issued IFRS 13 – Fair Value Measurement in May 2011. Corporate treasurers are no strangers to regulatory hurdles and challenges, and IFRS 13 is no exception.

The standard highlights the importance of having "independent valuation" tools using proprietary models, such as those in titantreasury. This feature means you not only have the resources to explain the components of the valuation to your management and auditors, but also full details on how fair value is calculated and changes over time.

Our role is to help you model your derivative portfolios and accurately measure credit value adjustment (CVA) and debit value adjustment (DVA) values.

Alongside CVA/DVA, the solution also helps to manage counterparty risk, according to the ratings provided by the three main agencies: Fitch, Moody's and S&P, including algorithms to compare ratings between agencies and automatically use the rating of your choice.

 

 

IFRS 16

IFRS 16 is the new standard for accounting for leases. The leased asset is recognised as an asset on the balance sheet and the lease payment commitment as a liability.


IFRS 16 introduces a new model for accounting for lease contracts for both lessees and lessors.
It replaces IAS 17 (off-balance sheet accounting of lease commitments). The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases:

  • Under liabilities, a debt corresponding to the lease payment obligation;
  • Under assets, an amount calculated to represent the right to use the underlying asset;
  • In the income statement, depreciation of the right of use and interest on the lease liability (which replaces the lease payment).


It’s worth noting that some lease contracts are exempt from the requirements of the standard:

  • Contracts where the lease term is 12 months or less;
  • Contracts where the underlying asset has a low value (< $5,000);
  • These contracts are recognised on a straight-line basis over the lease term.
titantreasury handles a broad range of accounting features for the financial commitments managed in the tool.


What are the IFRS 16 challenges for software developers?

Besides measuring the value of leases, the main hurdles in implementing IFRS 16 are:

  • drawing up a group wide inventory of all lease contracts,
  • the rate, term and conversion rate for a fictitious loan,
  • managing renewal options,
  • the tool's ability to impose a general accounting principle, which is essential for consolidation.
Based on the evidence available, we opted to team up with an expert partner for IFRS 16, not only to deliver each client project to the highest standards, on time and to specifications, but also to simplify and speed up implementation, streamline the process and provide authoritative professional backup.

 

 

EMIR

titantreasury simplifies and automates the entire management process for EMIR reporting.

Automate the entire reporting and reconciliation of EMIR confirmations – with no human input.

titantreasury has a comprehensive database that includes and consolidates all the regulatory frameworks you need to manage financial transactions, including the European Market Infrastructure Regulation, EMIR (LEI, UTI, framework agreements, etc.).

What titantreasury provides treasurers to help with EMIR compliance:

  • A complete Companies repository (internal entities, banks, issuers, brokers, agencies, custodians and intermediaries)
  • A framework agreement,
  • A set of LEIs (Legal Entity Identifiers)
  • An Interpretation (integration) or automatic creation of UTI (Unique Trade Identifiers) codes, especially for intra-group deals.


titantreasury prepares the EMIR notifications for users, automatically and transparently. It automatically detects the fields eligible for EMIR reporting and connects to your Trade Repository (TR) platform to submit your report files and obtain the receipt for the report.

 

 

BASEL 3


Basel III is the third international set of measures developed by the Basel Committee on Banking Supervision in response to the subprime financial crisis that laid bare the vulnerabilities in the banking system. They follow on from the Basel I and Basel II agreements.

ALM (Asset Liability Management) has become crucial for institutions.

Basel III rules require financial institutions to analyse their balance sheets under different scenarios to demonstrate stability under current conditions and that the right management framework is in place to manage risk in the coming months and years.

Asset and liability management meets these requirements by analysing the use of resources and cash flows under different scenarios.



titantreasury has complex ALM functionalities to meet the needs of institutionals and bank treasury and finance departments with a rich range of options:

  • Configure periodic upward or downward ALM laws, with, if necessary, a minimum negative growth or maximum positive growth threshold
  • Configure “target” ALM laws by specifying an amount and/or target to meet by a given date
  • Law sequencing (1 runoff law followed by "x" target laws or "y" target laws)
  • Compute the liquidity gap and its periodic variation
  • Calculate interest margins based on selected rate scenarios


titantreasury also provides ALM reporting that breaks down transactions into Assets and Liabilities, as well as easy mapping of ALM laws with calculated aggregates.

 

 

MIFID 2

The revised package of rules known as MiFID II (Market in Financial Instruments Directive) came into force in January 2018 and replaces MiFID I. The 2008 financial crisis exposed weaknesses in financial markets and the need for stronger protection. One of the goals of MiFID II, negotiated in 2010, is to strengthen the framework for regulating the markets. Cumbersome and complex, the implementation date was delayed until January 2018.

Central to the standard is the obligation to report speculative trades and their size relative to financial markets in Europe with the aim of checking speculation.

The MiFID II reports in titantreasury were developed as part of a dedicated solution for marketing and purchasing departments in the agri-food and agricultural processing industries.

How titantreasury helps with MiFID II:

  • Structuring and consolidating robust and reliable enterprise-wide master data according to a single reporting framework;
  • Monitoring risky positions (ideally with value at risk), mark-to-market valuations of instruments,
  • Meeting the requirements of front-, middle- and back-office users, as well as those of senior management, auditors and accountants;
  • Facilitating and optimising exchanges with the company's ecosystem of 3rd party business and accounting tools, trading platforms, market data, payment data and more;
  • Providing flexibility and scalability to shape your company's business strategies;
  • Producing comprehensive, clear and configurable reports for specific needs and participants (operating, financial, top management);
  • Providing simulation tools to plan and set up appropriate hedges.