Since the last financial crisis, regulators have shone a spotlight across the industry to ensure its stability. And intraday credit flows have been no exception. While there is an absence of globally binding regulations for intraday credit reporting, many jurisdictions are, generally, giving regulators oversight of total credit lines and the highest usage threshold – thereby requiring banks to assess the worst-case scenarios. In The Banker’s “Financial Intelligence Guide”, Deutsche Bank’s Christine Thomas, Head of Financial Risk, Institutional Cash Management, assesses the impacts of increased regulatory oversight upon market participants
With banks now required to have secure funding sources, they must either secure more committed credit or liquidity from elsewhere – which comes with increased costs. But Thomas notes that Deutsche Bank is leading the way in navigating these new requirements by developing new intraday credit products that align client interests in supporting credit clearing as well as the Bank’s own credit considerations.
Ultimately, Thomas believes effective management processes are crucial to minimising liquidity costs. Noting the need for banks to optimise their own payment behaviour, Thomas asserts that it is the responsibility of banks to ensure that intraday flows are matched successfully – and regulatory uncertainty is no excuse.
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