Swift warns on Basel III liquidity reporting
The monitoring tools mandated by the Basel Committee on Banking Supervision require banks to gather data on their intraday liquidity risk, rather than their balance sheets, as well as data on their ability to meet payment and settlement obligations in normal and stressed conditions.
“Progress needs to accelerate in order for banks to be ready for BCBS reporting,” said Catherine Banneux, senior market manager, banking, at Swift. “To achieve the level of detail required by the retrospective BCBS measures, banks will need to build the intraday position for each of their accounts with real-time credit or debit confirmations.”
However only 20% of total correspondent banking payment instructions on Swift are confirmed with a credit or debit confirmation message, according to the paper.
Actual implementation depends upon the regulatory mandate at the national level but the BCBS would like banks to start monitoring by January 2015 and is aiming for full implementation by January 2017.
“Banks need to take a pragmatic approach,” said, Wim Raymaekers, head of banking and treasury markets, at Swift.
“There is a fair amount of uncertainty about the reporting requirements across jurisdictions. While that is being ironed-out, banks should start preparing by leveraging the infrastructure and data formats they already have in place to feed their central intraday liquidity transaction database.”
Swift suggests that banks start assessing their current reporting coverage and start making moves to close the gaps, whilst addressing data centralisation.
It also predicts that industry practices will change, becoming more collaborative and standardised to address the challenges of intraday liquidity management.
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