Cash payments and funding efficiency

For years, banking and markets organisations, especially leading broker-dealers, have been at the forefront of managing intra-day liquidity to serve their balance sheets, developing market-leading cash and collateral management practices.

As far back as the late 1980s, the repo market was used for secured funding and full use was made of available assets to raise cash, or to make money from long cash positions. Collateral management capabilities were built that other cash-rich retail banks often failed to adopt.

Now, international and domestic regulation is changing the world of treasury management forever.

  • Basel III is impacting liquidity coverage and net stable funding ratios
  • Dodd-Frank is affecting increased initial margin and segregated client initial margin
  • CASS has significant implications for the protection of client money and assets

These regulatory pressures, combined with the increasing cost and value of liquidity and capital, mean that financial markets need to transform their active management of cash and collateral.

As one example, the move to mandated central clearing of eligible OTC derivatives to the risk reduced world of exchanges has led directly to an increased demand for collateral through initial and variation margin calls. That means another new headache for the Treasurer, whose responsibility it is to maintain the company’s capital and liquidity positions.

Our Services

We look at treasury across the whole enterprise, from process design and STP through to payments and funding infrastructure and the quality and availability of data. We combine substantial practical experience with sector-leading regulatory knowledge to help clients deal with the increasingly complicated and time-consuming demands on the diminishing pot of assets used by their treasury to manage the liquidity of the organisation.  Typically, we work with clients to optimise:

  • their collateral management processes, including collateral transformation to be acceptable as margin
  • their liquidity management processes
  • their cash management, to ensure they can fund all their activity on a daily basis, including real time cash management, intra-day reconciliations, and the full automation of all processes
  • their network management,  to ensure that they align with the best global service providers for both cash and clearing, including helping to negotiate the best terms and conditions with available intraday facilities
  • the demand on the payments department, to ensure controlled and timely outflows, balancing internal needs with those of the central banks and regulators.