The primary responsibility of the Treasury department is the management of Sigma’s liquidity risk. Within this remit our goals are to minimise funding costs, market risk and rollover risk, maximise investor and geographic diversification, and to maintain ample reserves of contingent liquidity. These goals are clearly conflicting and the constant challenge is to find an appropriate balance between them.
We fund Sigma through the issuance of top rated commercial paper and medium term notes in both the US and European markets. We aim to post in size across a number of maturities on a daily basis and will control the volume of paper we issue under each programme in line with current funding levels, depth of liquidity, and investor demand. In addition to our regular issuance, we post indicative term levels and pride ourselves on our responsiveness to reverse enquiry.
The issuance of Sigma’s debt securities is strongly supported by our dedicated investor services functions in New York, London and Geneva. We work alongside the investor services team, co-ordinating our efforts on a daily basis to ensure that the investor is given the most professional service possible.
When issuing debt we are responsible for ensuring we do not expose Sigma to significant market risk and do so by hedging our issuance with foreign exchange transactions, forward rate agreements, and swaps when necessary. We also place a large focus on maintaining a smooth cash requirement over time whilst at the same time avoiding the need to borrow on illiquid dates such as quarter ends and FOMC meetings.
Finally, we are responsible for managing Sigma’s contingent liquidity position. Historically this has consisted of traditional bank facilities and liquid assets but is increasingly being diversified into alternative forms that provide liquidity in a more flexible and cost effective manner.