Banks lag behind in implementing liquidity monitoring tools- report

The intraday liquidity monitoring rules were set out by the Basel Committee on Banking Supervision (BCBS) in April 2013 and according to a survey by Swift, 89% of respondents think a collaborative approach by banks is essential or very important to help reduce the overall implementation cost for the industry and increase the pace at which the intraday liquidity data challenges can be addressed.

While 68% of respondents have started a project, only 31% are at the implementation stage. Meanwhile, 37% have started an initial evaluation of their readiness, leaving 32% of banks currently without a process. The survey also shows that many countries have not yet translated the tools into detailed requirements, steering the industry towards a short term pragmatic approach.

Only 39% banks have their payments confirmed in real-time by their Nostro service providers, which is a critical step for banks to meet the intraday liquidity monitoring rules. The BCBS recommendation intends for banks to start using the monitoring tools for reporting from January 2015, with full implementation by January 2017.

The survey of 150 industry professionals evaluates the implementation status of the BCBS monitoring tools for intraday liquidity at financial institutions. The survey also captures market views on collaborative solutions as a means to drive down implementation costs.

Additionally, the survey showed that 74% of banks will use the credit/debit confirmations (the Swift MT 900/910 messages) in the first instance to build their liquidity monitoring tools, 42% of respondents confirmed that they do not have a global view of the intraday liquidity usage for their Nostro accounts and 89% of market participants surveyed are supportive of a collaborative approach to reduce the overall implementation cost for the industry and speed up issues resolution.

Finally, the report argues that the fact that 74% of banks will use the MT 900/910 credit/debit confirmations to build their liquidity monitoring tools means that the data sourcing approach planned by banks for the implementation of the BCBS monitoring tools is consistent, which the authors find “rather reassuring as this confirms that collaboration could deliver substantial benefits”. Swift will include a specific date, time and time zone field for the message types MT 900/910 in the 2015 FIN release.