It had to happen and, finally, it has. Bloomberg have ’soft launched’ a full blown treasury management system for the middle market - companies with annual sales turnover of $500m-$5bn. For years consultants have been telling Bloomberg that “you are sitting on a golden opportunity to develop a TMS of your own”. But to do this Bloomberg needed an experienced team that understood the TMS market and corporate cash management, and how to bring together the huge range of functionality in Bloomberg into a meaningful package for the corporate market. They now have such a team and the first version of their TMS is now available, it is called ‘Bloomberg TRM’. It could change the corporate TMS market for ever. Bengt Elvinsson, Assistant Treasurer for Corning, commented on the FRIDAYclub on 24 October, see, that, “Bloomberg is one of the most interesting treasury management system development during the last 10 years. It has a great backbone with many modules, rate feeds, and a lot of the good stuff that many TMS are missing. Also Bloomberg has the financial strength to drive the development of a complete comprehensive solution for corporations.”

TRM functionality

Bloomberg are positioning TRM as being able to, “Run all your treasury activity from one simple platform – integrate cash management, risk management, trade execution, lifecycle management and hedge and treasury accounting, together with enterprise resource planning systems (ERP) and SWIFT integration; all in one workflow.” The Bloomberg TRM (Treasury Risk Management) package is designed to provide all the basic functionality and workflows for a middle market treasury department which includes: cash management, risk management, electronic trading, hedge accounting and treasury accounting with minimal customisation allowed. Bloomberg TRM runs on the Bloomberg Professional Service platform

The North American style cash management module provides:

• integrated SWIFT connectivity to enable data collection of e-balances (MT 940s & BAI) + reconciliation
• bank statements are automatically delivered into the pre-configured cash position worksheets to enable optimization of cash, automated sweeping and target balancing, and concentration daily
• integrating with leading ERP systems to enable automatic importing of accounts payable & receivable (AP/AR) for cash position worksheets for an accurate position and better cash management
• cash flow forecasts based on the AP/AR data.

TRM integrates all the risk management functionality in the standard Bloomberg terminal such as the MARS risk package, which provide corporate treasury departments with the market leading tools to:

• combat increases in financial risk, mitigate exposure to large losses in asset prices or earnings, and gain insights into the underlying business
• help improve cost effectiveness and identify new opportunities
• respond to the impact of regulatory change and heightened post-2008 levels of economic instability, by offering a more holistic view of financial risk positions across the enterprise
• simulate future interest rate risks and cost based on underlying commercial and financial flows
• analyze your counterparty and key public customer and supplier credit risk
• carryout real time mark-to-market valuations, utilizing Bloomberg’s powerful analytics and market data feeds.

Bloomberg’s electronic trading FXGO platform is part of the TRM providing:

• trade execution with banks, global exchanges and connectivity to clearing and settlement engines, delivering straight through processing throughout the trade life cycle
• settlement of trade and integration with SWIFT and your cash management.

The advanced hedge accounting available within Bloomberg TRM enables corporate treasury departments to:

• ¥ describe the outcome of their risk management strategy, the rationale for hedging and the impact of hedging in the financial statements
• ¥ document, assess and measure hedge effectiveness under the applicable accounting standards (FASB, IFRS).

The treasury accounting provides:

• valuation of interest rate and cross currency Swaps, FX forwards and options and other complex derivative standards, which can be posted to user’s own ERP systems
• cash and month end accounting journals for treasury transactions, including Market Value, Clean Market Value, Accrued Interest, FX Result, IR difference and all cash accounting events for trades processed by the system
• pre-configured standard chart of accounts and account rule mapping, based on US GAAP or IFRS accounting Bloomberg industry standard valuations are the basis for month end accounting. .

Much of this functionality was already available in the basic Bloomberg terminal, what the development of Bloomberg TRM product has done is to make this functionality more accessible to the corporate treasury department. 

Look and feel

At the moment, Bloomberg TRM product looks very much like a Bloomberg terminal. Indeed, one corporate treasurer described it as looking ‘awfully old fashioned’. But don’t be fooled, the functionality is there and working. Bloomberg will make TRM prettier and smoother over time. As always, first functionality, and then, second prettiness and smoothness. 

Packages and charges

Bloomberg has a standard price for TRM which is available in two offers:

• a simple TRM:  $25k per year (normal Bloomberg terminal cost) + $5k for bank management
• the standard TRM providing all functionality: Bloomberg terminal cost $25k + $25k for the full TRM and includes four browser connections to Bloomberg for subsidiaries and other departments to link to TRM for the cash management functionality.

Implementation

Bloomberg are claiming that implementation of a TRM only takes a few days effort – typically around a week -  which is way below the norm for any other TMS service or package. Project timescales will depend to a large extent on how responsive your bank is to providing the necessary SWIFT connectivity.

Global Support Team and future development

One reason that other TMS suppliers are so concerned about the Bloomberg TRM is that Bloomberg have assembled a team of TMS heavy weights including the global business head Terry Beadle - ex-Wall Street Systems, plus Mark Lewis from Wall Street Systems, and Steve Bullock, ex-IT2, to drive the development of TRM. These experienced players are working with the Bloomberg global sales and support teams to ensure seamless service world-wide. 

Future developments plans for Bloomberg TRM include the development of: in-house bank facilities, a payment factory and multi-lateral netting. 

Questions raised

The lack of customisation and insistence on standard processes and workflows for basic cash management and risk functions raises important questions for corporate treasury departments:

• can you manage with such proscribed functionality?
• is it worth removing the complexity in your cash and treasury management to be able to use the Bloomberg TRM?
• is your cash and treasury management too complex?

The nature and scale of Bloomberg’s TRM product and support also raises important questions for other TMS suppliers:

• how can we standardise/commoditise our system to simplify and reduce the implementation time?
• how do we match the global support that Bloomberg provide?
• how can we standardise our system to reduce our prices?

---

CTMfile take: Although Bloomberg TRM is in its first iteration, there are clear signs that: 1) it will attract many users and could change the nature of the corporates thinking about cash and treasury management complexity, and, 2) it will change the nature and composition of the TMS market world-wide. When their TRM product is fully established, Bloomberg plan to carryout a full launch of TRM, nevertheless the market disruption has already started. This could be one of the most significant developments in treasury management for many years.