Intraday Liquidity – Trap #1

New rules. BCBS 248. This important tome for the banking regulators Swiss refugium in Basel asks for a lot of things, which are gradually being implemented by the national regulators. Preparing for a course I am giving, I stumbled across several traps that need illuminating. This week: requirements vs. principles.

The frequency of the reporting requirement under BCBS 248 is monthly. Much like much other regulatory reporting. There is though a catch. There are requirements and there are operational principles. Principle number 2 is a hidden “gotcha” rather like the tricky supplementary question from Prime Minister’s Question Time in the House of Commons.

“Have the capacity to monitor intraday liquidity positions against expected activities and available resources (balances, remaining intraday credit capacity, available collateral)”

The simple question is all about reporting; did you fill in the monthly reports. The tricky one comes next: “Please show us how you do the intraday monitoring in practice”.

Lessons to be Learned: I have been speaking to quite a few people in bank who are preparing for this new requirement. They are all looking at the reporting requirement; weighing up whether they can source and process SWIFT intraday messages or whether they have some custom solution from each Nostro and Depot.

They have been too narrowly focussed. As far as I can tell, not one of them has spent any time on the principles; nothing they are putting in place will allow them to do what principle #2 says they must; monitor intra-day. All the reporting they are putting in place will only allow them to provide a retrospective view of what did happen rather than deliver an ability to see and manage what is happening.

Previous Posts: Are available on the 3C Advisory website, click here.


The Bankers’ Plumber’s Handbook

How to do Operations in an Investment Bank, or Not! Includes all the Blog Posts, with the benefit of context and detailed explanations of the issues. True stories about where things go wrong in the world of banking. Available in hard copy only.

Cash & Liquidity Management

An up to date view of the latest issues and how BCBS guidance that comes into force from Jan 1 2015 will affect this area of banking. Kindle and hard copy.

Hard Copy via Create Space: Click here

Amazon UK: Click here

Amazon US: Click Here

Thanks for your support and thanks to the numerous contributors.

Share on: