Banks are generally accustomed to monitoring risk on a multiday or longer basis, but risks in the payment and settlement process can ripen in a single day. Supervisors are looking more and more closely at intraday risks, and particularly at banks’ ability to monitor intraday credit exposures and liquidity. Their scrutiny centers on reporting of intraday payment patterns, liquidity usage, and credit extensions, and it is directed at banks with extensive retail and large-value payment operations, correspondent banks, and banks involved in clearing and settling foreign-exchange, derivatives, or securities transactions.
These organizations are likely to find that developing the internal systems and organizing the necessary resources to improve their intraday risk management is a significant undertaking. Please click below to read a Sightlines InFocus by Jeff Stehm, Yoko Otani, and Bill Rutledge that outlines global standards for intraday liquidity management, challenges with data collection and reporting, and key considerations for boards and senior managers to improve their intraday risk management.