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Forex Transaction Processing

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Forex Transaction Processing

Setting up a treasury team has never been an easy thing for a mid-size company or SME. The challenge lies in identifying good resources, training them and once they learn whole gambit of foreign exchange space, then to retain them. Even a small infrastructure is very costly to set up.

Here at RouteForex we assist mid-size companies in executing and negotiating rates with their bank with our unique product called Forex Transaction Processing (FTP).Over the last decade lack of transparency in the FX market led to windfall profit to the banks treasury income and losses to corporate. Time has come when these small size companies can even look for optimise their treasury operations by outsourcing the professionals like us.

Forex Transaction Processing FAQ's

Forex Transaction Processing (FTP) is a concept devised by RouteForex to bring Treasury front office services to corporate and HNI clients in India. The service helps corporate limit transaction costs in the forex markets by brining transparency at affordable cost.

FTP has many benefits

  1. It helps corporate freeze their financial transaction costs while dealing in foreign exchange markets.
  2. It helps corporates engage with forex professionals to keep an eye on their transactions.
  3. Reduce the cost of operating their own treasury set-up by outsourcing it to a third party.

The Relationship Managers at RouteForex engages with finance teams to do a short audit on the previous transactions to ascertain the current costs. This current cost forms the basis of the benefits this company will accrue in future.

We don't advocate client's to change their banks. We believe bank is a partner in their businenss in different form and shape. Currently, we are servicing more than 200 corporates Pan India who bank with more than 40 banks. We have been able to convince clients and banks to process forex transactions once client mandate is shared with the bank and us. Mandate is a letter of authority in favour of Dealers at RouteForex to cover transactions on behalf of clients.

That is good news for you. We are happy to note that you have taken cognisance of the fact that bank has charged you over and above what was agreed. The dealers at RouteForex have been successfully convincing banks on the prevailing inter-bank, Cash/Tom rates. Though in some cases it may take us 2-3 transaction to bring the bank at par to our costs and requirements. Dealers at RouteForex need a supportive and understading client to quickly normalize the operations.

We are a corporate entity which is not governed by Reserve Bank of India (RBI). Nevertheless, RBI guidelines doesn’t restrict any third-party intervention in forex dealings. They only want the transaction (cash flow) to be routed through a Authorized Dealer (AD). We have been successfully concluding transactions for more 200 companies today.

We are extremely sensitive of the fact that Client relationship with the bank is prime. At all times we ensure that all our interactions with the bank are professional, cordial and smooth.We have ensured all interactions with the banks are done on a recorded line to safeguard interests of our clients and dealers. We have zero-tolerance for non-compliance on this front.

A dealing room is a place where financial transactions are undertaken on real-time. The room is equipped with all systems to assist dealers to undertake transactions in a secure and timely manner. When we say secure, it means, all transactions are audio recorded.

The dealing room has a restricted entry and only dealers appointed by RouteForex can enter that premises. The systems are secured and encrypted to protect client information. Further, we don’t seek ask for information which is privy to clients and their businesses. Only information sought is Amount, Currency, Nature of Transaction (Export/Import), Type of Transaction (Cash/Tom/Spot/Forward) and the bank.

Yes we provide the service of timing the market for a good rate for client transactions which comes under the purview of Advisory services. Our dealers are required to cover the transaction as and when a request is received from clients. Yes, we can surely watch for any particular levels at which client wants to transact. Once those levels are traded in the market, dealers at RouteForex will inform the client.

RouteForex acknowledge the fact that this is a new concept and most of the prospective clients are hearing about it for the first time. To demostrate the benefits we provide One Free Trial to clients.

The documentation is very basic and easy. We have a service agreement letter to be signed by the client and us which has all the Do's and Don't's of this service.

Bank Margin is the commission which the bank charges over inter-bank rates. In most of the sanction, it is not mentioned by the bank. The treasury decides on case to case basis. The bank does an analysis of the relationship to arrive at the margin to be charged from a particular client.

No, we don't undertake task to negotiate bank margin with banks on behalf of clients. We provide basic advisory on the range of bank margin basis the turnover and industry.

No, RBI doesn’t have any control over the rates quoted by banks. The rates in forex markets are quoted Over-the-counter (OTC) and volatility is very high. Also, the marketable lot in the inter-bank market is $250k, below which banks covers their position by aggregating. Clients needs to put in place systems to watch the volatility and real-time rates to control cost leakages.

All client orders and subsequent cover with banks are taken over recorded lines. The deal confirmation comes with the exact time of the transaction covered with the bank. A client can request for the voice recordings for some of the transactions randomly to keep a check. The IT team at RouteForex is working on providing complete information on the transaction on our website through a User ID and Password for each client.

The bank covers transactions with people mentioned in the Board Resolution (BR for Companies) and Letter of Authority (Sole Proprietor/Partnership Firms). It is the prerogative of client to assign this responsibility on the person. Most SME Corporates doesnt have the know-how of the forex market operations. In case, they decide to hire treasury professional, the costs are too high. Thus, RouteForex provides a cost-effective outsourcing model.

The references are shared subject to client permission. At all times, we keep client transactions private and confidential. A prospective client can ask the Relationship Manager at RouteForex to provide industry/location based references. Additionally, we keep updating Client Testimonial section of our website to share opinions and feedbacks.

Yes, technology is the answer for the future. Many MNC and Private sector banks are offering transaction portals and Live screens to their clients to improve efficiency and reduce costs. While we conduct trial transactions for clients having Online rates from banks, we have shown them the difference in the rates. The back-end of all such screens is administered by banks and is prone to tweaking. We have 4 such clients who have shifted from Screen based transaction portals to manual coverage by RouteForex dealers.

RouteForex has created additional capacity in the dealing room to conclude transactions in a timely mannner. As soon as we receive a transaction, dealers contact the bank officials for rate covering. It usually takes not more than 3 minutes to cover a particular transactions. Yes we admit that while on boarding a new client, it takes 2-3 transactions to smoothen the operations. It is important to bring bank officials in the know how of the change of operations.

RouteForex works for its clients. Our relationship with the bank is Limited to the extent of covering transactions. We keep an eye on all client transactions to limit any leakages in rate offered by banks.

FTP is a revolutionary service which can reduce costs upto 2% on each transactions. We have shown maximum difference of Rs.2.50 per Dollar on rates offered by banks. This difference increases in case of forward contracts and cross-currency transactions. We are working hard to service 500 corporates by March 2019 covering transactions worth USD 4 billion for our clients.

RouteForex covers the entire spectrum of corporate clients in India. Our smallest client is a 8 cr forging exporter in Faridabad . On the other extreme, we cover transactions for clients with annual forex volumes of USD 150 mn.