In April 2013, the Basel Committee on Banking Supervision published a set of quantitative monitoring tools for intraday liquidity management, that require all international banks to start reporting on seven key metrics between January 2015 and January 2017.

A recently published survey on bank-readiness conducted by Swift reveals that banks are consistently facing the same types of data gaps. According to the survey, 61% of respondents claim their Nostro transactions are not confirmed in real-time and 23% have the same issue for the high-value payments systems to which they are connected; 42% of respondents confirmed they don’t currently have a global view of intraday liquidity usage for Nostro accounts held by their foreign branches; and 74% of respondents will use credit/debit confirmations to build their liquidity monitoring tools in response to BCBS requirements.

Swift has developed a four-step approach for resolving key data management challenges, implementing intraday liquidity monitoring dashboard and developing regulatory reporting.

Step 1 is data sourcing. The first priority for any bank is to understand its own liquidity flows at global entity and currency levels and to assess its current transactional data coverage for the regulatory reporting.

Swift has developed a methodology to develop metrics which provide different views in terms of value and volume, and enable the user to identify data gaps at currency, country or correspondent level.

Step 2 is data assessment. After the initial analysis, the bank can determine initial priorities for further action. The output of this assessment is a detailed report documenting issues, identifying types of transactions not reported on an intraday basis, missing data from the reporting, or data not yet integrated internally.

The report also helps confirm and quantify any gaps in centralizing reporting across global organizations. Swift works with the bank to jointly define or improve the data model for its liquidity dashboard and regulatory reporting.

Step 3 is supporting data collection and centralization. BCBS monitoring tools require banks to collect timed data at transactional level. This implies that all debit and credit movements have to be confirmed and provide the exact time at which the account’s position has been affected.

FINInform – a feature of Swift’s store-and-forward messaging service ‘FIN’ –sends a real-time copy of the intraday reporting message received by the different entities from their different correspondents, to the Group Treasury BIC (Bank Identifier Code) without any impact on operations or on counterparties.

Step 4 is building a transactional data repository and an intraday liquidity monitoring dashboard. Swift has developed an on-site service covering a bank’s intraday liquidity transactional repository and an intraday liquidity monitoring dashboard based on Swift messages and on the existing Liquidity Implementation Task Force best practices.

Featured image Sergey Nivens/Kozzi