Intraday Cash & Collateral Management

Almost on queue, every 7-10 years a period of stress in the banking sector reminds us of what Warren Buffet once said, “it’s only when the tide goes out that you learn who’s been swimming naked.” And now following the mini-crisis of 2024, “intraday” is the operative word du jour one hears at conferences, planning meetings, and at watercoolers.

During these times of stress, firms learn firsthand how well their liquidity planning, stress tests, and technology capabilities perform. After the recent stress in the regional bank market with the failure of Silicon Valley Bank, Signature Bank, and First Republic Bank along with liquidity issues at New York Community Bank, Treasurers, Funding teams and Operations leaders have renewed focus in two key areas (among others):

Intraday. In the current context – how effectively can a firm measure, analyze, and manage its intraday collateral and cash?

Monetization. Do firms have the capability to understand how much collateral they have? Do they know where it can be utilized? And do they have the means to fund it on demand in the market? Said another way – how valuable is their collateral when they really need it?

The Bank of International Settlements has long outlined key requirements for intraday liquidity management under BCBS 248 which provides guidelines on these critical capabilities. And with the recent liquidity issues surfacing within the banking industry, these capabilities have again become a focal point.

BCBS 248’s guidance provides the baseline for effectively managing intraday liquidity, but after the recent turmoil, firms are increasingly focused on whether collateral and funding sources can be appropriately monetized during periods of stress. This monetization can take many forms and key capabilities include the following:

• Ensuring the firm can evaluate whether its collateral is eligible across funding sources and collateral agreements including central banks, FHLB, CCPs, and financing contracts.
• “What if” analysis using optimization analytics to evaluate if its collateral pools are sufficient to raise needed funding from available secured funding sources.
• Ensuring end-to-end solutions to mobilize collateral across these venues and operationally support funding processes.

Transcend has been at the forefront of providing collateral & liquidity management solutions to increase the efficiency, automation, and resiliency of a firm’s collateral and funding processes. Transcend’s key solutions Include:

Eligibility Central: Digitize, harmonize, and analyze eligibility schedules spread across CCP, triparty, derivatives, and bi-lateral securities finance systems to evaluate asset eligibility across these agreements.

Inventory Management: A holistic look into the attribute-rich composition, sources, and utilization of your global assets.

Intraday Liquidity Management: Harmonize cash and securities balances across depos, nostros, and internal accounts. Comprehensively analyze intraday account activities and accurately forecast cash or security balances to make smarter decisions.

Optimization: Connect eligibility, inventory supply, and collateral obligation data spread across internal and external systems to identify optimal funding and liquidity decisions spanning collateral types and business lines.

To learn more about any of these industry-leading capabilities, click here to get in touch with the Transcend team.