Institutional investors have grown more discerning about where they place capital. Strong returns and a solid track record are no longer enough on their own. Allocators now scrutinize how fund managers handle concentration risk, counterparty exposure, fee transparency, borrowing costs and margin requirements, treating the inner workings of fund operations as a core part of due diligence.
This shift has pushed treasury operations, long regarded as a back-office function, into a much more prominent role. Fund managers facing difficult conditions across both liquid and illiquid markets have started looking for performance gains in areas of the business that were previously overlooked, and treasury has emerged as fertile ground.
From Operational Cost to Operational Alpha
For years, the primary goal of treasury was to avoid becoming a drag on performance. That mindset is changing. Forward-looking firms increasingly treat treasury and financing as a potential source of profit rather than simply an operational necessity. Realizing that potential requires rethinking how treasury functions are structured, staffed and enabled with technology.
Spreadsheet-driven workflows, still common across the industry, tend to slow decision-making and keep treasury confined to a narrow, reactive role. Modern platforms replace that with real-time visibility into cash positions and projected flows across brokers, custodians and OTC counterparties, giving treasury teams a foundation for faster and more informed funding decisions.
Where the Alpha Actually Comes From
Once accurate, unified data is in place, several concrete actions become available.
Securities financing strategies add another dimension, allowing managers to compare counterparties and negotiate more favorable borrowing and lending rates. Active collateral management may offer the largest opportunity. Many funds carry more posted collateral than their positions require, and transparency into those balances can unlock capital efficiency.
Artificial intelligence is accelerating the shift. AI and machine learning tools can flag unusual values against historical trends, generate settlement confidence scores and project cash balances based on a firm's own trading patterns. Natural language processing also enables treasury teams to extract structured data from unstructured sources, such as emails and confirmations, reducing the manual effort that has traditionally slowed reconciliation.
Regulation Adds Urgency
Two regulatory developments deserve attention. The CFTC's Uncleared Margin Rules, phased in through 2022, continue to bring operational complexity for firms trading bilateral OTC derivatives. More significantly, SEC rules finalized in 2023 and updated in 2025 will require certain US Treasury and repo transactions to move to central clearing through the Fixed Income Clearing Corporation, with compliance mandatory by June 30, 2027. Funds active in the repo market should expect higher margin requirements and funding costs, along with broader pressure on bank liquidity that could affect funds well beyond that segment.
Separately, the tokenization of margin collateral is still in the early stages, but its potential to reduce settlement risk and failed trades makes it worth monitoring as adoption grows.
Choosing the Right Path Forward
Modernizing a treasury platform can sound like a heavy lift, but outsourcing has become a practical alternative to a lengthy in-house build. It gives firms access to sophisticated analytics and automated workflows without the burden of hosting and maintaining the underlying technology, while also offering more flexibility to scale as needs change.
Firms evaluating outsourced treasury solutions should weigh a provider's track record with fund managers, the scalability of its technology, the strength of its security posture and whether it has a demonstrated history of turning treasury operations into a source of measurable value.
The fund managers who treat treasury as a strategic function are the ones positioned to turn operational discipline into a competitive advantage. Download our white paper, Treasury Management: A Competitive Advantage, for a closer look at how to build a data foundation, navigate the regulatory landscape and choose the right technology partner to get there.