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Treasury Compliance Training for Bank Treasury functions

Treasury Compliance Training Course for Bank Treasury Function

We recently ran a treasury compliance training workshop for one of the largest treasuries in the region. The suggested outline was put together after joint discussion with the treasury and corporate governance team and focused on possible market abuse challenges and the introduction of the ACI Model Code document. The relevant segments of the outline are produced below

Figure 1 Treasury Compliance training – outline

The challenge was how to cover morality immediately after breakfast on a Saturday morning. A bigger challenge dealt with the right definition of morality. Is there a universal moral code that you can refer to at short notice? (The short answer is yes, deep inside yourself you carry it and know immediately if what you have done is right or wrong).

Luckily rationality came to our rescue. One of the first question we ask when a trader or a senior manager gets caught and exposed is what were they thinking? How could they even think that they could get away with it?

If we assume that all traders and treasury resources have had some exposure to Economics 101, the answer is simple. We are all taught that rational thinking will hold supreme and come out ahead. The rationale thinking model clearly states the following:

Expected Payoff > Penalty – Go ahead

Expected Payoff < Penalty – Think twice

Over the years with decades of rationale thinking driven analysis between them, most traders look at the above trade off in trading terms. To bring them down for the temple of rationality you have to ask a different kind of question. How would rationality hold in an imperfect world with asymmetric payoffs and utility.

Interestingly enough we are also seeing a clear shift on the regulatory side where there is now a desire a to make a regulatory bite really hurt. The thinking on that side of the table is that if we have enough examples of regulatory wrath around, traders will think twice before being seduced by the rational thinking gambit.

But it’s not enough to just cover the rational thinking gambit. The ACI Model code over the year has become a reference document across markets and treasury association. A treasury compliance workshop must introduce the ACI Model code and highlight the relevant sections associated with market abuse as well as treasury compliance challenges.

However there are gaps with respect to abuse of authority and the risk of getting fired by not following specific “illegal” instructions issued by a higher authority. In today’s operating environment, the biggest question a trainer needs to answer is, “I get it, but what do I tell my boss?” and “Do I really have a choice?”

But then there are aspects that the ACI Model code doesn’t cover. The Rajat Gupta case being a perfect example, where we move away from the rational world to the dimension of human failing.

Treasury Training, Treasury Operations


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