LIQUIDITY MANAGEMENT:
THROUGH COMPLIANCE AND BEYOND
In 2010 and beyond, Rule’s new Liquidity Management Practice anticipates that changes in the liquidity management space in the UK will be largely driven by the need to minimise the cost of liquidity, to safeguard the banks and to create competitive advantage.
A Financial Services Authority spokesman recently predicted that “banks are likely to have to raise an extra £110 bn of liquid assets at an annual cost of £2.2bn” in response to policy statement 09/16. Once the size and cost of these liquidity buffers becomes apparent, as they are allocated by the FSA, the banks will be forced to take active steps to minimise the buffers’ size and pass on the cost to their customers.
Swiftly then, the focus will move away from actual regulatory reporting to concentrating on minimising the cost of that compliance. In addition, leading banks will seek real competitive advantage by implementing proactive liquidity management capabilities to administer their liquidity more effectively.
Although particular challenges remain in the areas of real time, intra-day liquidity management, liquidity pricing and creating a liquidity-centric view across a bank’s securities businesses, tremendous opportunities also exist for banks to benefit from significant operational efficiencies in the management of liquidity, to gain valuable insights into customer behaviour and to develop new customer services.
Rule Financial’s unrivalled combination of business experts and innovators in Liquidity Management, Risk Management, Securities Finance and Collateral Management, coupled with our experience of delivering change in complex banking environments, positions us ideally to service our customers.