BNY Mellon plays a critical role in the global financial ecosystem. This is a bank that likes to dominate the market, and it has stayed big and clever by knowing what to pay attention to and what to ignore.

So if BNY Mellon continues to pay attention to the lucrative field of intraday liquidity, you should ask yourself, why?

Here’s a starter for ten from Paul Adamo, COO & CFO of BNY Mellon Treasury Services,

“The need for strong liquidity management tools is critical in any rate environment. Times of stress don’t always announce themselves.” 

Part of the value of robust liquidity management indeed lies in mitigating risk. But, perhaps more telling, is that BNY’s increased focus on real-time liquidity shows us the importance of working capital. How, in addition to speeding up digital transitions, it is vital to have quick access to cash that is securely stored.  

“The value of liquidity management, which traditionally hinged upon being paid high interest rates from deposits, is being increasingly enhanced by minimising risk: to ensure cash is in the right place, at the right time, in the right currency.” Innovation in Cash and Liquidity Management, Aite-Novarica, Jan 2023

Now, our Planixs experts delve deeper into BNY’s thinking around leveraging real-time liquidity. We will also offer practical advice about the opportunities and benefits a forward-looking financial institution can deliver through intelligent liquidity management.

How BNY is driving precision and profit through effective liquidity management

1. BNY Mellon’s treasury realised that having up-to-date and easy-to-access data is critical to managing liquidity effectively. The bank changed its approach to liquidity management by moving from end-of-day or next-day towards same-day (intraday) management of cash.

This shift allowed for more efficient and proactive management of cash flows throughout the day, enabling highly profitable optimization of liquidity and better risk management. 

2. BNY Mellon has long been famous for its triparty platform. This has become a cornerstone of its growth in payments and investments.    

3. Using similar logic, BNY Mellon has targeted the limitations of overnight repo. Now, the Clearance and Collateral Management business is introducing intraday repo on the triparty platform. Intraday repo will allow borrowers to specify the precise duration of liquidity they require, rather than being tied to a 24-hour period. This innovative approach opens the door to borrowing or lending cash on an intraday basis.

Key takeaway

Many institutions have already woken up to the fact that if you want to mitigate risk and make your money work harder through the use of intraday repo, you must have real-time data at your fingertips.

“Real-time liquidity management is a must. No longer is liquidity management only an end-of-day activity with follow-the-sun and against-the-sun options. With some providers charging intraday interest by the minute, real-time position-keeping plus real-time execution are both vital and will only become more so as real-time payment schemes become more prevalent and grow in volume.” BNY Mellon case study, Aite-Novarica, Jan 2023

The question is why, and how can you benefit?

As BNY has discovered, real-time liquidity management ensures timely payment obligations and avoids liquidity shortfalls. Regulators also emphasise the need for banks to account for intraday liquidity needs in their recovery and resolution plans. As interest rates rise and liquidity costs escalate, the cost of intraday liquidity has increased along with Fed attention.

Additionally, changes in market structure, such as shorter settlement times and real-time settlement of securities and payments, necessitate real-time liquidity management. These market factors have intensified the demand for efficient liquidity management tools and strategies.

Less stress, more insight

As Martin Wolf, the chief economics commentator at the Financial Times observed soon after Silicon Valley Bank’s collapse, “the marriage of risky and often illiquid assets with liabilities that have to be safe and liquid … is a calamity waiting to happen.” 

Wouldn’t it be better to know the state of your in-and-out liquidity in real-time, at any given moment of the day, and make sure it starts earning you money rather than costing you?

You can make incredibly accurate forecasts of your real-time liquidity usage using the right tech. Imagine the power that knowledge gives you.

Real-time liquidity management is a gateway to transforming your operations and untapping opportunities for growth. In short, you get a goldmine of actionable insights that allow you to be a change-maker in your organisation.

How to optimise liquidity usage and extract value from liquidity resources

Built by experts who have worked in the banking sector for decades, Realiti® is the only liquidity intelligence platform to deliver real-time 360° control and insights across your entire liquidity landscape, in one place. The platform has enabled many financial institutions to transform cross-firm data into a single source of truth and put pioneering liquidity insights into the hands of stakeholders and decision makers across the organisation.

You are warmly welcome to ask us any questions. Book a call to get expert advice from Planixs, we’d love to talk to you.

Want more? The BNY Mellon case study

By utilising BNY Mellon’s triparty platform for intraday repo, borrowers and lenders benefit from streamlined operational processes. The automated nature of the platform facilitates efficient collateral management, transaction settlement, and reporting, reducing administrative burdens for all parties involved.

As excess reserves in the US banking system decline, the necessity for cash and rapid access to it is expected to increase. Intraday repo provides dealers and borrowers with a market-driven solution to fulfil their short-term liquidity requirements, aligning with evolving market dynamics.

The benefits of intraday repo

– Enhanced flexibility, allowing borrowers to access liquidity for shorter periods of time, aligning precisely with their specific cash outflows

– Cost efficiency, as intraday repo connects borrowers and lenders directly, potentially reducing borrowing costs and reducing dependency on expensive intraday credit sources

– Operational efficiency, as the intraday repo platform streamlines collateral management, transaction settlement, and reporting processes, reducing administrative burdens 

– Addresses temporary funding gaps efficiently, offering a market-driven solution for dealers in need of liquidity during specific periods of the business day

– Aligns with evolving market dynamics, where the need for cash and rapid access to it is expected to increase as excess reserves in the US banking system decline

Let’s get you started on your real-time liquidity management journey

As Simon Squire, global head of product management Clearance and Collateral Management at BNY Mellon says,

‘Intraday liquidity management, and more specifically intraday liquidity, will continue to be a key focus for the industry. BNY Mellon is actively exploring additional ways to unlock intraday liquidity using its triparty infrastructure along with other innovative solutions.’ 

If you would like to speak to one of our treasury experts to learn more about gaining real-time visibility across your cash and securities liquidity, or you would just like to find out a little more about our real-time solution, contact us today.