International Payments - Advanced Workshop

Registration Process: 8:30 AM – 9:00 AM

Session Start Time: 9:00 AM

Session 1

Setting The Scene

• A short refresher into some basic principles which serves as an introduction to the advanced aspects of the course. In this introduction we deal with issues such as;

The Marketplace

A short review of the nature and extent of the international payments/ foreign exchange market.

• The size of the market
• Who the participants are (both key players and occasional users).
• How the market is developing and its past growth

Basic Foreign Exchange Principles

• How foreign exchange operates.
• FX transactions, how they are processed and how they are settled.
• Foreign exchange settlements – Correspondent banking and Continuous Linked Settlement (CLS).

Session 2

Operational Risk and International Payments

In this session we restate some key risk principles.

• What is risk?
• What are the different types of risks that effect international payments/ foreign exchange operations?
• Why operational risk is 'special'
• How these risks effect the bank

Session 3

Best Practice

• What are best practices for international payments and foreign exchange?
• We explore how using these practices may also help to reduce the level of risk in the international payments arena and how these practices can help reduce operational costs?

Future Trends

• What are the major trends in the international payments and foreign exchange market Management's role in effective risk mitigation.
• Why operational risk is 'special'

Session 4

The International Payments/ Foreign Exchange Process Flow

In this session we the generic view of the foreign exchange process flow, from pre-trade preparation, trade capture, confirmation, netting, settlement, nostro reconciliation, and the accounting & financial control processes. This lays the foundation for a detailed examination of each of these processes, the activities that they entail and the risks and their mitigation.

Examples are given for each of the processes involved to give the delegate a clear understanding of the key operating and risk issues involved.

Sessions 1, 2, 3 & 4

Using Best Practice

The remainder of the course offers a comprehensive range of practices that are designed to optimize day-to-day international payments and processes that are specific to the foreign exchange industry.

We examine the seven standard international payments/ foreign exchange processes in detail. The processes dealt with include; pre-trade preparation, trade capture, confirmation, netting, settlement, nostro reconciliation, and the accounting & financial control processes.

Our approach embodies the following;

• We examine the individual process, what it is meant to achieve and now it operates
• We assess the potential risks In each process.
• We set forth the best practices that should be used for the process concerned in a way that ensures optimum efficiency and minimum risk.

For each process we show below some of the mitigation factors that will be covered in detail during the workshop.

Pre-trade preparation

Know your customer, Documentation requirements, Master netting agreements, Agreement on trading and operational practices.

Trade capture

Entering trades, Using Straight-Through-Processing, Use of real-time credit monitoring, Standing settlement instructions.

Confirmation

Special requirements for confirming by non-secure means (structured or nonstandard trades, confirming by telephone), Controls electronic trading platforms, Verify expected settlement instructions, Netted transactions, Internal transactions - Block trades and split allocations, Third-party advices, Confirmation matching process, Exception processing and escalation procedures.

Netting

Online settlement netting systems, Bilateral net amounts, Cut-offs for netting, Consistent operational practices and documentation.

Settlement

Real-time nostro balance projections, Electronic messages for expected receipts, Cancellation and amendment facilities, Payment failures, Thee settlement process and settlement exposure, Crisis situations outside your organization.

Nostro reconciliation

Nostro account reconciliation, Identify non-receipt of payments, Operational standards for nostro account users.

Accounting & financial control processes

General Ledger reconciliation, Daily position and Profit & Loss reconciliation, Daily position valuation, Trade prices for Off-Market Rates.

General Best Practices for Managing Foreign Exchange Operations Risk

Segregation of duties, Business and operational roles, Understand operational risks, Procedures for introducing new products, new customer types, or new trading strategies, Control system access, Audit/risk control groups, Operational performance measures, Outsourcing & industry standards and best practices, Record keeping, Contingency plans.

Richard Barr , holds a B.S. in International Business Administration from San Jose State University in California. His professional experience spans over 23 years, 5 of which were spent with Wells Fargo Bank. Another 5 were spent honing his global banking skills, when Richard was intimately involved with International Trade Finance, Real Time Gross Settlement and Cross Border Banking. The past 14 years have been in the private and high-tech sectors providing high-level consulting services, business analysis, project management and training to a wide range of banking clientele across the globe.

Richard has also filled the role of advisor to central banks on payment systems and technical payments issues. Furthermore, key staff members from the Bank of England, South African Reserve Bank, Central Bank of Ireland, Bank Indonesia, European Central Bank and Bank of Portugal have attended training sessions presented by Richard.