Liquidity Management Strategies Moving towards Integration, Visibility and Agility 流动性管理策略：向集成、可预测性和高效转变 Alvin Poh Head of Liquidity Solutions, Asia Pacific Treasury Services J.P. Morgan

Challenges Faced by Treasurers Today 当今司库面临的几大挑战

1

Agility and Scalability

Liquidity Management

Operating Efficiency

Foreign Exchange

Regulatory / Political Landscape

Good grasp of impact to treasury operations due to political developments and regulatory changes

Able to adapt quickly to changes in business models & regulatory landscape, and liquidity model that is scalable as business expands

Have full visibility of cash balance, enhanced forecast capability and an optimal liquidity model

Achieve operating efficiencies with fewer bank accounts and increased automation with reduced headcount

Dynamically manage FX exposure as unreliable rate sources may expose you to unnecessarily FX risk or mispricing in the local currencies

Transformation of Treasury Role

Transition of role from treasury support to business partner to develop business strategies and achieve sales growth

Risk Management Increased focus in risk management as business grows and expand into new countries

Key Market Themes and Implications 几大市场主题及影响

2

Rising Rates of the USD

ECB and BoJ to continue to expand balance sheets

Negative interest rates being applied for Euro and Japan

Market Trends Regulatory Development Interest Rate Movement

China – gradual relaxation over cross border flows & internationalization of RMB

Malaysia – new FEA rule states that exporters need to settle domestic payments in MYR, immediately convert 75% of export proceeds into MYR

India – the government demonetized high-value notes to fight “unaccounted” income and counterfeit notes and move to a more cashless economy

(1.0)0.01.02.03.04.05.0

US

ECB

UK

China

Japan

Benchmark Interest Rates

$34 trillion

40% of respondents

Forecasted value of cross-border payments in 2018, up 54% from 20131 leading to increased international payments business to manage globally

Report they have significantly reduced the number of correspondents with whom they carry out cash transactions with over the last five years2

1 Aite Group Cross-Border Payments: Challenges and Trends, 2015 2 Bishopsgate Financials Payments Survey 2016

In 2016 we learnt to expect the unexpected, a surge of regulations, low or decreasing interest rates in key markets, except in the US where the rates are trending up.

Australia

Source: JPM Global Data watch, Factset

Develop an Optimal Level of Cash Buffer & Mobility 确定现金缓冲和流动性的最优水平

3

Market fragility witnessed last year is expected to continue with heightened levels of uncertainty. Measures to ensure liquidity is optimized with the “right” buffer is crucial in times of prolonged volatility.

Operating Cash

Reserve Cash

Strategic Cash

Restricted Cash

Analyze trends and ensure data quality to produce accurate cash flow forecasting

Determine optimal level of cash for the business across subsidiaries / regions

Build in cash buffer that can be easily deployed within the firm.

Optimize returns while protecting principal

Treasury action plans

Conduct cash flow analysis to understand the operating liquidity requirements to meet working capital fluctuations

Determine local and regional account requirements and optimal liquidity structure to increase visibility

Adjust existing structures to the target model, including the built-in level of optimal cash buffer

Consolidate accounts and bank relationships where possible and ensure cash can be injected and repatriated as nimbly as possible given the regulatory boundaries

Minimize offshore earnings build-up. Maximize utilization of restricted cash locally

Utilize liquidity solutions to build in mobility and allow for local / regional authority to optimize funds.

Regional Pool A/C

Local A/C Local A/C

Local A/C

Regional Pool A/C

Local A/C Local A/C

Local A/C

Regional Pool A/C

Local A/C Local A/C

Local A/C

Global Pool A/C

Optimal Level of Operating Liquidity

Benchmark Liquidity Structure

Key Liquidity Management Toolbox 流动性管理主要工具

4

Challenge Liquidity Management Products Key Benefits

Multiple local banking relationships

Centrally control cash without interrupting local operations & banking relationship

Reduce local bank counterparty exposure

Minimize manual operations

Uneven cash balance across accounts of the

same currency

Manage cash against target balances, automate centralized balance management

Automate sweeps based on pre-defined parameters

Single consolidated cash position

Reduce overdraft costs

Unused idle balances on local currency accounts

Automatically swap balances from non-functional currencies to functional currency

Centralize control and automate booking of FX

Reduce exposure to low, negative yielding or volatile currency

De-centralized cash management across multiple currencies

Achieve benefits of cash concentration without FX swap

Increase natural FX hedge

Enhance deployment of group cash

Gain visibility and control, while entities retain operation autonomy

Single Currency Sweep

Cross Currency Sweep

Multi Bank Sweep

Notional Pool

Leverage Treasury Solutions to Stay Agile and Improve FX Efficiencies 利用头寸解决方案保持应变能力，提高外汇交易效率

5 * Please reach out to your J.P. Morgan representative for applicable currencies and geographies.

‘Just-in-Time’ Funding

LCY*

USD Functional currency

Payment currency

Automated funding of transaction only when needed

Cross-currency Sweeping

LCY*

USD Functional currency

Collection and payment currency

Automated sweep based on target or zero balances

ACCESS FX

THB

USD

TWD HKD

GBP VND

KWR

RMB EUR

Low volume x-currency payments

Minimize restricted country trapped cash Maximize functional currency liquidity Eliminate FCY bank accounts

Flexible, modular solutions to holistically address your treasury challenges and stay agile in today’s market conditions

Traditionally solutions such as cash concentration, pooling and multi bank sweeps were implemented to help increase visibility and control of liquidity across the region

As cross currency needs have grown and regulatory considerations have increased along with demand for automation across our clients new innovative solutions have been added to complement the existing options

Automate Cash Deployment via Just-in-Time Funding 通过资金实时拨付实现现金配置自动化

6

Common Challenges

Manual process to forecast funding requirements of accounts in different countries and currencies, and fund transfer

Need to be mindful of the cross currency FX cut off time

Process flow 1) Submit payment files to J.P. Morgan for processing

2) At designated time J.P. Morgan automatically checks for funding needs based on payment file received and will fund based on pre-determined parameters

3) J.P. Morgan automatically books and settles FX trades, and funds the payment account on value date

4) The payments are processed on value date

5) Automated same-day reporting available

Fully automated funding

Client

Client payments processed

1

2

3

Beneficiary-2

Beneficiary-1 4

J. P. Morgan Just-in-Time Funding – Automated sweep with embedded currency conversion

5

Efficiently Convert and Centralize Balances via Cross Currency Sweep 通过自动外汇交易实现高效货币兑换和余额集中管理

8

Common Challenges

J. P. Morgan Cross-Currency Sweeps – Automated sweep with embedded currency conversion

Accuracy of forecasting incoming volumes resulting in unplanned excess balances Increased manual effort for treasury to manage excess cash balances Prolonged negative interest rate environment that could incur additional costs

Benefits Simplify account structure and consolidate duplicate bank accounts

Scalable and flexible to meet changes in your business model

Fully automated solution with online reporting

Visibility and control over FX rates and spreads

Configurable solution giving maximum control

Choose from range of currencies including but not limited to G101

Pre-agreed timing of sweeps

Zero or Target balance settings

Minimum and maximum limits available for the sweep

Online / Host to Host and SWIFT reporting options

Illustrative

Excess balances maintained in preferred currency

EUR Account USD Account 3

Online reporting is available

2

Incoming transactions

1

Automatically move and convert balances from an account in one currency to an

account in another currency

4

1 The exact number of payment currencies may vary by branch location

Gain FX Rate Transparency and Improve FX pricing 提高汇率透明度、优化外汇定价

8

FX Rate Visibility FX Pricing Optimization Process Improvement

Make payment decisions effectively

Input minimal payment details

View indicative rates*

Pricing engine delivers refreshed rate every 30 seconds

Leverage streaming rates that are live for two minutes for up front contracting needs

The indicative rate* displayed reflects the client pricing and is consistent with the spread applied to existing FX payments

Gain pricing benefits Aggregated FX Pricing

− Group together multiple payments of the same currency pair for execution at the same time

− FX rate determined by the aggregate notional value of the transactions

Netted FX transactions − Net same currency pairs executed

at the same time to minimize unnecessary FX purchase***

Simplify reconciliation

See your final FX rate at the time of payment release**

Know the exact debit and credit value of your transactions

For payments executed at the same time receive a consistent FX rate for same currency pair transactions

Knowledge of applied FX rate** at time of transaction execution results in expedited reconciliation

* Availability of online rates is subject to local regulatory approval in each country. The rate at which the FX transaction will be executed may differ from the indicative rate displayed. You should not regard any indicative rate provided to be an offer to enter into an FX transaction at that rate.

** The applicable foreign exchange rate determined by J.P. Morgan includes a profit to J.P. Morgan (or its affiliates) and an additional spread, and may include other fees. *** FX spread will be applied based off the netted amount. In limited circumstances, this may result in the application of a higher spread to the netted amount.

Applied Intelligence

Purchase Power Simplification

Get Rate

Enhanced Visibility & Data Analytics Capability via J.P. Morgan ACCESS® InsightSM

通过摩根大通ACCESS® InsightSM 提高清晰度和数据分析能力

9

J.P. Morgan ACCESS® InsightSM makes the process more efficient, flexible and accurate.

Key features Create a customized worksheet that can be automatically populated with your bank account data, or use data extract definitions to populate your

existing spreadsheet

Refresh balance, transaction and payment/receipt data – including multibank – whenever you choose, for greater accuracy and control

View balance, transaction and payment/receipt detail directly from your spreadsheet making further research fast and easy

Save historical data to analyze your cash flow trends

Benefits Minimize access to multiple bank portal online and retrieve bank

balance Improve operation efficiency with automated update of bank

balances

Case Study: Follow the Sun Liquidity Structure & Cash Concentration at In-House Bank (IHB) 案例研究： 全天候流动性架构与内部银行(IHB)资金归集

10

Key client’s challenges J.P. Morgan solution:

3 separate treasury centres globally, with de-centralized cash management, resulting in low visibility of global cash position

Large number of bank accounts across 30 different banks and no proper counterparty risk control

Manual processes for funding, sweeping, foreign exchange and investment transfers

Client wanted to simplify banking structure, reduce accounts & concentrate cash at In-house bank

Separate cash concentration structure in the respective region that enables maximum cash concentration and full visibility globally, but with minimal disruption to local entities’ operations

J.P. Morgan implemented a streamlined account structure: ̶ In-country collections & payments to benefit from local clearing ̶ Multibank sweep for countries that need to maintain 3rd party banks ̶ Multicurrency notional pool in Singapore & London, and physical cash

concentration in New York (global master account in New York)

J.P. Morgan New York

J.P. Morgan Singapore

J.P. Morgan In Country AU Co

AUD SG Co SGD

AU Co AUD

SG Co SGD

IHB USD

HK Co HKD

HK Co HKD

J.P. Morgan London

UK Co GBP

DE Co EUR

IHB USD

CH Co CHF

IHB USD

JP Co JPY

JP Co JPY

UK Co GBP

DE Co EUR

CH Co CHF

NO Co NOK

3rd party Banks NO Co NOK

JP Co JPY

AU Co USD

SG Co USD

HK Co USD

JP Co USD

UK Co USD

DE Co USD

CH Co USD

NO Co USD

Legend In-House bank a/c (J.P. Morgan) Operating a/c (J.P. Morgan) Operating a/c (3rd party banks) Collections & payments Automated sweep (J.P. Morgan) Multibank sweep Multicurrency Notional Pool Physical cash concentration

Q&A

11

问答

This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including such client’s subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor any of its contents may be disclosed or used for any other purpose without the prior written consent of J.P. Morgan.

The information in this presentation is based upon any management forecasts supplied to us and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change. J.P. Morgan’s opinions and estimates constitute J.P. Morgan’s judgment and should be regarded as indicative, preliminary and for illustrative purposes only. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Company or any other entity. J.P. Morgan makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a transaction. Unless expressly contemplated hereby, the information in this presentation does not take into account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and other effects.

Notwithstanding anything herein to the contrary, the Company and each of its employees, representatives or other agents may disclose to any and all persons, without limitation of any kind, the U.S. federal and state income tax treatment and the U.S. federal and state income tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and tax structure insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to the Company by J.P. Morgan. J.P. Morgan's policies on data privacy can be found at http://www.jpmorgan.com/pages/privacy.

J.P. Morgan’s policies prohibit employees from offering, directly or indirectly, a favorable research rating or specific price target, or offering to change a rating or price target, to a subject company as consideration or inducement for the receipt of business or for compensation. J.P. Morgan also prohibits its research analysts from being compensated for involvement in investment banking transactions except to the extent that such participation is intended to benefit investors.

IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters included herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone not affiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

J.P. Morgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan arranging, financial advisory and other investment banking activities are performed by a combination of J.P. Morgan Securities Inc., J.P. Morgan plc, J.P. Morgan Securities Ltd. and the appropriately licensed subsidiaries of JPMorgan Chase & Co. in EMEA and Asia-Pacific, and lending, derivatives and other commercial banking activities are performed by JPMorgan Chase Bank, N.A. J.P. Morgan deal team members may be employees of any of the foregoing entities.

This presentation does not constitute a commitment by any J.P. Morgan entity to underwrite, subscribe for or place any securities or to extend or arrange credit or to provide any other services. 12