TAS Solutions for Intraday Liquidity Reporting
Each day, your bank handles intricate details, such as lending and borrowing money and other financial transactions, which if improperly managed, can leave you unable to meet your payment obligations, which raises your liquidity risk.
In fact, the financial crisis was proof of this. Since then, it has elevated concerns among regulators concerning the ability of banks to meet their payment obligations, especially during periods of market stress, prompting the Basel Committee of Banking Supervision (BCBS) to step in and enforce a new set of intraday liquidity monitoring measures to hedge against liquidity risks..
The Basel Committee of Banking Supervision (BCBS)
The financial crisis proved what happens when banks are unable to effectively manage their intraday liquidity risk. Therefore, in April 2013, the Basel Committee of Banking Supervision (BCBS) in negotiation with the Committee on Payment and Settlement Systems (CPSS), released a set of monitoring tools which focus on intraday liquidity reporting and monitoring.
These monitoring tools require financial institutions to gather the necessary data to enable supervisors to have adequate information to observe banks’ intraday liquidity risks, including their ability to satisfy settlement and payment obligations in a timely manner, under both normal and stressed conditions. As of January 2015, the BCBS paper requires all internationally active financial institutions to implement monitoring tools at legal entity and global levels, across all currencies, and submit their monitoring data to their banking supervisor on a monthly basis.
How BCBS Intraday Liquidity Reporting Works
Banks will be required to report their intraday position and risk and ability to meet settlement and payment obligations in a timely manner under both stressed and normal conditions, thus contributing to the uniform functioning of settlement and payment systems. To help ensure this smooth process, BCBS has implemented the following core reporting measures:
Though the BCBS do not require actual real-time management, it does require the availability of all liquidity entries. In other words, financial institutions need to trace their positions for each individual account on a real-time basis to build reflective monthly collective measures. These monthly reports must also include the delivery of credit/debit confirmation either by the payment settlement system or the account servicing institution for each activity on the account.
The management or centralization of all Nostro accounts is also required by the BCBS, including confirmation messages from Nostro providers. In other words, accounts must be integrated across currencies and cleared by the internal entity for effective reporting to the BCBS.
Service providers are required to report on their customers’ line of credit usage at global level, including an aggregated view for customers using clearing services for multiple currencies in different locations. To report on customers’ global credit line usage, banks are required to provide a centralized and standardized data collection at global level and legal entity identification, via their legal entity identifier (LEI), and corresponding with their comparable operational codes.
TAS Solutions for Intraday Liquidity Management
The BCBS has made it more crucial than ever to implement sound intraday liquidity management into your existing business model. Which means, in addition to banks managing the borrowing and lending of money, managing the way they fund any required additional liquidity at the lowest possible rate, and ensuring they meet their payment obligations and settlements effortlessly while limiting their credit line usage, they also need to practice sound intraday reporting practices in accordance with BCBS regulation.
TAS Solutions has made it easier for financial institutions to meet BCBS regulatory compliance, with its liquidity management tools. Collateral, cash, and securities are envisaged, consolidated, and balanced across all accounts (including legal entity, country, and customer level) and currencies in real-time into a single view. With TAS’s data module banks can:
- Utilize BCBS 248 monitoring tools for all banks
- Satisfy the reporting requirements as set by BCBS
- Cover the operational components under ‘Principles for Sound Liquidity Risk Management and Supervision’
- Access global intraday liquidity overview by legal entity, customer level, country, or currency
- Manage payment flows as needed
- Monitor features on a monthly or daily basis
- Utilize the flexible alerting system
- Easily integrate with bank back office and network applications
- Access Intraday Liquidity Intelligence
- Intraday liquidity reporting to corespondent customers
- Full Straight Through and Standardization processing
- Reduce impacts on core bank applications
- Realign liquidity positions to avoid breaches and mitigate risks
In addition to providing liquidity management solutions, TAS Group also provides technological applications and services for payment systems and financial markets and cards. TAS operates globally and prides itself on providing innovative solutions that boosts performance and improves compliance and risk, as it helps better manage cash flows and enhances returns.