Following a recent trial with 19 banking groups, UBS and Natwest are two of the banks that have committed to go live on the the Finteum intraday platform. Finteum is a DLT platform that enables orders and execution of intraday financial transactions. Later this year it plans to go live with an FX swaps solution, with repo and securities lending to follow.
Intraday liquidity solutions enable banks to specify the settlement window for transactions, reducing the amount of High Quality Liquid Assets (HQLA) they need to keep as reserves.
A 2018 report from Oliver Wyman found that for large banks with $100 billion in liquidity reserves, the carrying cost was around $100 to $300 million annually. It concluded that a 25% reduction in the intraday liquidity requirement could net savings of $25 to $75 million. However, in 2018 the figures were based on a carry cost of 1%. With rising interest rates, the cost savings of reducing liquidity by a quarter could be four or five times that, so $100 – $375 million.
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