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That’s the question one senior corporate treasury executive asked at the recent AFP Global Corporate Treasurers Forum.

“We continue to engage in the same financial transactions based on tried-and-true hedge mechanisms. But should we question it,” he asked. “We need to look at the soundness of the hedging approach more broadly. What would happen if the euro collapses?”

Find out what other FX, hedging and finance topics were discussed at the new AFP FX Risk Management Resource Center.

As the Senate nears a vote on financial regulatory reform, possibly later this week, Commodity Futures Trading Commission Chairman Gary Gensler touted over-the-counter derivatives reform at AFP’s Global Corporate Treasurers Forum today in Washington, DC.

Speaking before an audience of AFP members, Gensler said OTC derivatives reform must be:
• Comprehensive, regulating all financial firms that handle derivatives
• Standardized, offering exchanges to improve transparency and price, and
• Centralized, using clearinghouses so the CFTC can track trades.

“The more transparent it is, the more liquid and more competitive it is for our business, and it will ultimately improve your costs,” Gensler said.

Gensler added that end-users could choose not to trade derivatives with standardized contracts through clearinghouses—a major sticking point with some. “This would benefit all the corporates the Association for Financial Professionals represents,” he said.

In a question-and-answer period with AFP members following his remarks, Gensler said that the CFTC is working with its regulatory counterparts in Europe to create uniform derivatives regulations. One AFP member wondered whether trading derivatives with standardized contracts through clearinghouses would impact his ability to use hedge accounting. Gensler answered that he could use hedge accounting because the trade could be a “tailored transaction,” which would qualify for FAS 133.

Asked whether it was difficult to make the case for derivatives reform to Wall Street, Gensler was curt. “They get to make their case to Congress, and we get to make our case to Congress.”

Busy corporate treasury and finance professionals may find it hard to get out of the office for a conference these days, but one event that is definitely worth the trip is the AFP Treasury Management Forum, April 21-23, in Washington, DC.

Take a look at the companies speaking at the Forum:

•  AOL
• Bank of America Merrill Lynch
• BNY Mellon
• Citi
• Coca Cola Enterprises
• Costco
• Custom House, a Western Union Company
• Ford Motors
• General Mills
• Industrial and Commercial Bank of China
• J.P. Morgan
• McCormick
• REI
• SWIFT
• Towers Watson
• U.S. Bank
• USPS
• Zappos.com

Senior executives from these companies will cover your most important treasury concerns:

• Working Capital
• Risk Management
• Technology
• Globalization

Plus, two Members of the House Financial Services Committee have confirmed to speak as well:

• Rep. Jim Himes, D-Conn. Worked at Goldman Sachs for 12 years, rising to Vice President. Worked extensively in Latin America and headed its telecommunications technology group.
• Rep. Gary Peters, D-Mich. Vice President of investments for Paine Webber from 1989-2003. Before that, he was with Merrill Lynch.

The AFP Treasury Management Forum also is approved for CTP recertification credits and CEP credits. Register now!

For companies with a centralized treasury structure or a shared service center (SSC), identifying and benchmarking key performance indicators is critical. Corporate treasury professionals confronting this challenge can get valuable advice from their peers at the AFP Treasury Management Forum, April 21-23, in Washington, DC.

Robert Polansky, Director, Treasury Operations for General Mills, will lead a roundtable discussion—“ How Centralized Companies Are Managing Working Capital”—at the forum. Besides learning from their peers, attendees will discuss issues associated with SSCs and ERPs as well as goals to measure performance.

“Treasury and finance professionals should attend the forum in order to gain up-to-date knowledge on working capital management, risk management, globalization and technology,” says Polansky. “It will also offer a great opportunity to network with industry leaders.”

Register for the event here.

Chief financial officers and treasurers will convene in Washington in May to discuss how to operate in today’s financial environment.

The Association for Financial Professional’s Sixth Annual Global Corporate Treasurers Forum will take place at the Four Seasons Hotel, May 16-18, with Bank of America Merrill Lynch as the exclusive sponsor.

“AFP members have played a critical role in maintaining the financial stability of their organizations through the recession,” said Jim Kaitz, president and CEO of AFP. “Now they are moving forward based on new economic realities.”

Speakers include CFOs of McCormick and the Ratner Companies as well as treasurers of Yahoo! Inc. and Global Container Terminals.

“Bank of America Merrill Lynch is proud to sponsor this gathering of financial executives, which comes during a pivotal period for the treasury management industry,” said Dub Newman, Global Treasury Executive at Bank of America Merrill Lynch. “These discussions should prove invaluable to providing treasurers and executives with a deeper understanding of key issues and meaningful solutions to help businesses optimize their working capital.”

For more information on the Global Corporate Treasurers Forum, see www.afponline.org/gctf or download the event brochure.

When making payments to China, be absolutely sure you have the proper to documentation to do so, said Bill Lowe, SVP and Treasurer of LiveNation, Inc. “If you’re trying to bring money to fund your business or a shareholder loan, it’s especially important because that money has to come back out eventually,” he said. The first step you should take is to talk to your tax advisor and/or legal counsel, Lowe added.

In a question-and-answer period, Bell said the size of banks will be reduced. “It’s too difficult to manage” a trillion-dollar financial institute. “You’ll bank more and more with the locals.”

Asked about the economic impact of the swine flu pandemic, noting that the Mexican economy is in dire condition, Bell said, “Mexico has been very hurt. The answer for here is, ‘I don’t know.’ SARS had a temporary effect on the economy. These pandemics, unless you get something like the flu epidemic in 1918, the economy bounces back quickly. It will have some effect but not that serious.”

Bell ended with the following thoughts: “I see a slow period of growth but with some increase in interest rates. What are the implications of all of this?

“The world is diametrically opposite what it was a few years ago. We had a period of rapid growth. Housing prices were going up. And it was very easy to get money from a bank. Now we have very slow growth. We’ve gone from easy money to very tight money. And government is playing a much bigger role in the economy. And we’ll see more financial regulation. What I can guarantee is that it will change again. People will start to spend again but my guess it won’t take place for a few years to come.”

Leverage will be greatly reduced around the world, Bell said. “What does that mean? This reinforces the fact that we’ll have a period of slow growth ahead of us. This will have an effect on emerging markets like China. But I am confident that some of these developing countries will come out of the recession quicker than more developed countries.”

Ninety Days in Office

An influential international economist praised President Obama’s first 100 days as a “great success” and sounded an optimistic note that the global economy was improving.

Speaking at the 2009 AFP Payments and Retail Treasury Forum in New York City, Geoffrey Bell, president of Geoffrey Bell & Company and Executive Secretary of the international economic think tank the Group of Thirty, said the U.S. economy will stop falling some time later this year. “It will not look like a ‘V,’” he told attendees. “It will either be a ‘hockey stick’ or an ‘L.’”

Bell also said President Obama’s stimulus package has helped, noting that a number of economic indicators were starting to improve. “There’s no question we’re seeing a number of green shoots,” Bell said. “Things are not getting as worse as fast as they were, and that lets you believe you can see a bottom eventually.”