Intraday liquidity management and reporting: How to meet the challenges

Carlo R. W. De Meijer and Ludy Limburg
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Carlo R. W. De Meijer: Owner, De Meijer Financial Services Advisory

Journal of Risk Management in Financial Institutions, 2014, vol. 7, issue 4, 395-408

Abstract: Until recently, intraday liquidity was not a real issue for banks. Nor was it a serious topic on the regulatory agenda. There were no standard monitoring or liquidity management measures in place to give direction around intraday liquidity risk. This fundamentally changed with the financial crisis of 2008. Since then it has become clear that market stress can have an immediate and significant impact on liquidity in real time. Furthermore, regulatory initiatives will force banks to manage their liquidity more efficiently throughout the day in order to lower intraday liquidity risk. Whereas previously their processes were based on end-of-day forecasts, banks now have to consider their liquidity balances on an intraday basis. This requires banks to get greater visibility on liquidity during the day. To be compliant with the new requirements they should design an overall intraday liquidity management framework and build the necessary monitoring and reporting infrastructures. This paper will tackle issues such as improving the visibility of intraday balances in order to optimise liquidity buffers, enhance risk management and allow accurate reporting to regulators; the main challenges faced by regulatory requirements; and the problems and complexity in devising an all-compassing intraday liquidity framework.

Keywords: liquidity; clearing; settlement; intraday; dashboard; collateral (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2014:v:7:i:4:p:395-408

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