A message to the Australian Treasury Community


FY20 is about to come to a close, and I’m sure you would all agree this has been one of the most challenging years the world has had to face in a very long time.  However, for the FTA and the treasury community, the challenges have been tackled head-on, and we have emerged stronger and more confident in the importance and relevance of our profession.

Thank you

Firstly, a huge thank you to the staff, board, and committee members who have helped the FTA navigate these troubled times.  Without their support, the FTA would not be in the strong position that it is.  We have had a huge increase in the online delivery of events, with weekly webinars, and the Treasury Management Course being delivered virtually since the crisis hit.  We were on the front page of the AFR, highlighting the very important issues facing Corporate Australia, and hosted top-level talks with senior treasurers across Australia.

The FTA is stronger than ever

I am pleased to report the FTA is about to close yet another profitable year, and has a strong cash and capital position to see us through this crisis and emerge on the other side stronger than ever. A huge thank you to our members and sponsors for their continued support. This will allow the FTA to further invest in the treasury profession and execute on its strategy over the next few years.

Treasury is more important than ever

The global pandemic has reminded the government and business community of the importance of treasury professionals.  As they say, you should never waste a good crisis, and no doubt the next few years will see governments and corporations reflecting on lessons learned.  Treasurers should be asking for more resources to invest in people, policies, processes, and systems in order to strengthen the treasury function and prepare businesses for the roadmap out of the crisis.  To further support this, the FTA is executing its strategic objective to create a formal qualification for certified treasury professionals – watch this space as we plan to launch this exciting initiative later this calendar year.

Virtual FTA Conference 2020.

Back in March this year, as the FTA board met to discuss strategy, the first critical decision we made was to make FTA Conference 2020 an online only event.  The conference committee has pulled together a fantastic program and the technology platform promises to deliver everything an in-person conference would offer, and more!  Networking will be much more targeted as you can connect with other attendees virtually over the 3 days.  If you haven’t checked out the event details, here is a link on how to register.

Renew your membership!

To those members who continue to support the FTA – thank you!  For those who have yet to commit, we invite you to renew and continue to support the treasury community – you have 1 more day to claim that tax deduction!

Happy EOFY to all, and wishing you all the best for FY21.



Steven Cunico, FFTP


Message from the CEO: Broadening Eligibility of Corporate Debt Securities as Collateral for Domestic Market Operations

Broadening Eligibility of Corporate Debt Securities as Collateral for Domestic Market Operations

A great step forward for Australian Corporates was announced yesterday.  Australia’s corporate Treasury community has been working hard with bodies such as the RBA over recent times, and this announcement is a very welcome one.

The announcement advises that as a way of assisting with the smooth functioning of Australian capital markets, the Reserve Bank has broadened the range of corporate debt securities that are eligible as collateral for domestic market operations to investment grade.




Ben Leaver

Chief Executive Officer

Finance and Treasury Association 


Melbourne Senior Treasurers Dinner

The Finance and Treasury Association had the pleasure to host a number of Melbourne’s Senior Treasurers last night, representing some of the countries largest corporates.

The evening was full of fantastic discussion around the table on what the key issues effecting treasurers, treasuries and their business including the impact of Corona virus; the low interest rate environment, and the fact that it impacts not just borrowing; what would a negative rate environment look like and the need for an industry view; benchmark rate changes, when, how; ESG for both sides of the balance sheet; the shallow market currently existing for business with lower ratings; the advantages of Treasurers working in Investor Relations; supply change finance – reporting and implications of that, effect on ratings, possible change to accounting standards?

Thanks to Alice Van Der Geest, Uri Gordon, Shane Healey, Mark Tarlinton, Diane Crossley, Kim Kerr, Darren Murphy, Peter Kopanidis, Martin Dunton, Andrew Vandeligt, Karen Jordan, and Steven Cunico for your insights.

We look forward to doing it again, starting in Sydney in April!


Message from the CEO: Here to Help

Dear Members,

In these uncertain times, the Treasury function is as important as ever to every Australian business. If you have been impacted in your role by the current pandemic, we want to help.

Just as individuals have been impacted, so too have many Treasuries been impacted with extra responsibility and are as such resource poor. The FTA would like to bring together prospective employees and employers to match up capabilities and needs on both sides.

So if your team needs an extra set of hands to help with the day to day; or if you are looking for work, contact the FTA, Australia’s Treasury Community.

Do not hesitate to contact us at comms@financetreasury.com.au


Ben Leaver

Chief Executive Officer

Finance and Treasury Association 

Sydney Senior Treasurers Session

A fantastic continuation of our sessions with Senior Treasurers last night, this time via Zoom with Senior Corporate Treasurers from Sydney (and Perth!). 

Obviously the conversation was dominated by discussion on corporates current realities in time of crisis via COVID-19.  Was great to hear what a strong position many Australian corporates are in, and also the peer support for those whose business has been impacted greatly by circumstance from industry to industry.  What was very interesting, but not surprising, was how many lessons were learned by our Senior Treasurers from the post 2008 period, being put in practice over the past ten years to ensure liquidity as best can be.  Treasury truly is front and centre right now and we are lucky in Australia to have a very strong and experienced cohort.

Some really interesting conversations about the support mechanisms in place – RBA, Govt, Banks – and the inconsistency amongst these institutions, both domestically and in comparison to what is happening overseas, particularly in the UK and US.  Also discussed was the issue of who’s role it is to support corporates – RBA, Govt, Banks and the messaging coming out around that.

With Liquidity being the key risk issue to be addressed right now, it was fascinating to hear differing views around direction from Boards on drawdowns of approved facilities, Bank attitudes to new facilities (and the order of who get’s priority) and the need by corporates to balance not contributing to the overall liquidity problem with their own requirements –taking timely, proactive steps being paramount.

Overall the message was that on the whole, corporates have been very well served by Treasurers over the past ten years, but that doesn’t remove the challenges that will now exist for some time, including the uncertainty around budgeting and the way out over the next period.   We can’t forget that while this is about corporates, there are many, many small businesses in the ecosystem of our corporates who are affected, not to mention the hundreds of thousands of people employed.  Our Treasury teams are vital to ensuring we all emerge from this in a good position, and even a better one as we learn to adapt to new ways of thinking and working.

At the FTA, we have a role to play in co-ordinating any government approach to this situation, and would welcome any feedback or contributions.

Many thanks to Sarah Scopel, Blathnaid Byrne, Michael Larkin, David Rowe, David White, James Berne, Carol Lydford, Darren Lake and Tim Cipolloni.


Message from the CEO: COVID-19

Dear Members,

I’m writing to update you on the FTA response to the growing COVID-19 threat.  Given the amount of information you are already receiving, I will keep this brief.

From a resource perspective, we are very small, but we are now working separately to each other, while maintaining member servicing.  While this is important for the well being of the team, it is vital that we play our part in restricting the spread of the virus through our communities, and therefore to those most vulnerable people.  This is something we feel very strongly about and believe everyone should be undertaking where possible.

For our members and Treasury community, we are working hard to ensure ongoing value and a continuing viable business.  To that end we are

  • Not holding any face to face meetings or functions from March 16 until May 31 unless advised by authorities that it has become safe to do so.  We will further advise any addition to this.
  • Working  hard on delivering an increased online CPD program via increased numbers of webinars and content sharing
  • Exploring ways to deliver other educational programs in a virtual or online environment
  • Finalising improvements to our website including a communications forum to facilitate online networking and discussion

On behalf of the Board, I thank you all for your ongoing support, and while we consider these steps to be the only option for our wider community, we do apologise for any disruption this may cause.

If you have any questions, do not hesitate to contact us at comms@financetreasury.com.au

Stay safe, take care of each other – we look forward to resuming normal programs as soon as possible.



Ben Leaver

Chief Executive Officer

Finance and Treasury Association 

Melbourne’s Senior Treasurers Dinner

The Finance and Treasury Association had the pleasure to hosted a number of Melbourne’s Senior Treasurers last night, representing some of the countries largest corporates.

The evening generated fantastic discussions on the key issues affecting Treasurers and their businesses including the impact of coronavirus; the low interest rate environment, and the fact that it impacts not just borrowing; what would a negative rate environment look like and the need for an industry view; benchmark rate changes, when, how; ESG for both sides of the balance sheet; the shallow market currently for lower rated debt; the advantages of Treasurers working in Investor Relations; supply chain finance – reporting and implications of that, the new leasing standard and the effect on ratings.

Thank you to all who attended – we look forward to doing it again, starting in Sydney in April!

Reserve Bank of Australia – Uncharted territory for unattainable goals

Reserve Bank of Australia – Uncharted territory for unattainable goals

3 October 2019



Aidan Shevlin, CFA
Head of Asia Pacific Liquidity Fund Management
J.P. Morgan Asset Management



At the beginning of October, the Reserve Bank of Australia (RBA) cut its overnight cash rate by 25bps to a new record low (Exhibit 1a).  The third rate cut in five months has effectively halved the central bank’s key policy rate – leaving the RBA in uncharted territory and one step closer to unconventional monetary policy to achieve potentially unattainable employment and inflation goals.  The current trajectory of cash rates will have significant and far-reaching implications for local currency cash investors.

Optimistic rate cuts

In recent speeches, RBA governor Philip Lowe struck an upbeat tone, noting the economy had reached a “gentle turning point”1 helped by a combination of low interest rates, tax cuts, lower currency, infrastructure spending and housing market stabilization.

Despite this professed optimism, the RBA still cut rates in October and remained dovish, committed to “ease monetary further if need to support sustainable growth in the economy, full employment and the achievement of the inflation target”2. However, given current lack of macroeconomic drivers to achieve the central banks full inflation of 4.5% was last reached in 2008 and core inflation target of ≥2% (Exhibit 1b), the probability of attaining either goal remains remote.

The reality is more nuanced: While Australia is currently in its 28th year of economic expansion, gross domestic product (GDP) growth has slowed to a decade low; moreover the rising participation rate is offsetting almost 2-years of positive jobs creation and despite the recent recovery, housing prices have fallen below their long-term trend.  Meanwhile, the long term slowdown and rebalancing of the Chinese economy will eventually weigh on exports – although short-term Chinese infrastructure stimulus will benefit Australia’s commodity driven economy.

Sluggish consumption and structural trends

Apart from weak global growth, the RBA’s other key domestic concern remains the lack of growth in domestic consumption – especially during a period of rising employment.  However, this can partly be explained by job insecurity, muted wage growth and the high level of consumer indebtedness (Exhibit 2a).  All these factors should still benefit from lower interest rates – suggesting that monetary policy remains an effective policy tool – provided commercial banks pass the rate reductions on to consumers.

Interestingly, for the first time, the RBA alluded to a new rationale for the latest rate cut.  The structural shifts in global interest rates (Exhibit 2b) – which have fallen to record lows have also placed downward pressure on Australian interest rates.  The central bank fears if it ignored the actions of major central banks, the “exchange rate would appreciate, which in the current environment would be unhelpful on terms of achieving both the inflation target and full employment”3

The implications of sustain lower interest rates

The recent rate cuts, fiscal stimulus and continued Chinese commodities demand, suggest the modest Australian economic recovery is likely to endure.  However, growing expectations of additional monetary policy easing by major central banks may force additional, unnecessary RBA rate cuts and even trigger unconventional monetary policy to restrain unwanted capital inflows and AUD appreciation.

For Australian cash investors who are more familiar with high interest rates, steep yield curves and competitive deposit rates, the prospect of extremely low or even zero yields represents a significant challenge.  These difficulties have been compounded by the Royal Commissions impact on commercial banks demand for deposits and the Australian Prudential Regulatory Authority’s (APRA) clarification on the definition of cash.

Nevertheless there are several techniques developed and refined during the past decade of zero US interest rates which should help Australian corporate treasurers mitigate some of these complications.  These include diversifying beyond deposits into money market funds and ultra-short duration funds,   segmenting cash by liquidity requirements and identifying sectors and tenors that offer additional return for minimal reductions in liquidity and security. 

Although combining these three techniques will not fully offset the negative impact of RBA rate cuts on cash returns, they will allow treasurers to achieve a competitive return consistent with the objectives of capital preservation and maintaining a high degree of liquidity.

To read more our liquidity insights, visit www.jpmgloballiquidity.com

 1 An Economic Update by Philip Lowe; as of September 24, 2019

2 Statement by Philip Lowe, Governor: Monetary Policy Decision; as of October 1, 2019

3 An Economic Update by Philip Lowe; as of September  24, 2019

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Defining cash for Australian investors

Aidan Shevlin, CFA
Head of Asia Pacific Liquidity Fund Management
J.P. Morgan Asset Management

The definition of cash, while ostensibly straightforward – banknotes and coins – becomes increasingly challenging when the demands for higher returns counteracts the obligation to ensure adequate liquidity and the commitment to avoid losses.

As memories of the liquidity stress and market dislocation triggered by the global financial crisis faded, the range of financial instruments deemed acceptable in Australian cash products broadened dramatically. This was also a time when investors grappled with the challenges of outperforming attractive headline retail bank deposit rates.

Unfortunately, defining which instruments are truly cash equivalents is one of the most difficult tasks for modern corporate treasurers.

The Regulatory Dilemma

Globally, cash investors look to regulators and rating agencies to define and clarify suitable cash investment instruments and structures.  This is especially true in the United States, European Union, and China, where the size and systemic importance of liquidity and money market funds (MMFs) made this a critical regulatory issue following the 2008 financial crisis.

These rules and regulations vary from prescriptive, listing specific approved and unapproved instruments, to abstract, outlining key sources of investment risk and limits to mitigate them.  Regardless of the regulator’s philosophy, the ultimate goals remain the same – to ensure adequate liquidity and minimise the probability of losses.  Over the past decade, global regulators have strengthened MMF guidelines. They now demand higher levels of liquidity, impose tighter investment limits and require increased diversification.  For both retail and institutional investors, these new rules have raised the standard of MMF investing while significantly reduced the likelihood of funds suffering losses, albeit at the expense of lower potential returns.

In contrast to detailed global standards, Australian regulators have historically demurred the responsibility to define cash or the suitability of various instruments for cash investments.  The Federal government’s unlimited bank guarantee during the Global Financial Crisis helped shelter the local financial industry while a long history of self-regulation encouraged investors to create their own definitions of cash and cash equivalents.

However, in 2018, a review of cash investment products by the Australian Prudential Regulation Authority (APRA) raised significant concerns about the level of volatility and risk in these products.  Across the industry, the range of instruments and structures defined as cash varied enormously – as did returns. This created confusion for retail and institutional investors.  In its subsequent report, APRA highlighted “examples in the industry where cash investment options appear to include exposure to underlying investments that would not generally be considered cash or cash-like in nature”1.

To encourage investment consistency and reduce the volatility of cash investment products, APRA concluded that “cash equivalents represent short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value”1

Cash means security, liquidity and return

The report signalled a tougher regulatory stance and additional focus on questionable cash investments styles.  However, in the absence of detailed regulatory guidelines and exact definition of liquidity and risk, investor due diligence is still required to balance the need to preserving capital, while ensuring suitable levels of liquidity and maximising returns.

Three key steps in this process involve clarifying investment policies, creating well defined investment objectives and implementing cash segmentation.

Firstly, using an investment policy statement forms a solid foundation for cash investment decisions.  A well written policy provides clarity, instils discipline and allows the organisation to successfully navigate shifting markets, changing regulations and evolving business needs.

Secondly, by defining short term investment objectives and the strategies for achieving them, an organisation can establish acceptable levels of risk, identify permissible investments and detail relevant constraints.

Finally, by putting cash into different segments, the organisation can optimise its investment choices – ensuring it has sufficient liquid cash to meet its daily needs while avoiding the opportunity costs associated with very high levels of liquidity and principal protection by diversifying across different types of cash investment depending on their level of liquidity, volatility, and diversification.

In Conclusion

The new APRA definition of cash has already prompted a significant reorganisation across the Australian cash management industry with several instrument structures being avoided and more conservative investment guidelines introduced.  This, combined with more due diligence and understanding of the underlying risks by retail and institutional investors, should help the industry create a safer foundation for future growth.

To read more our liquidity insights, visit www.jpmgloballiquidity.com