Despite the opportunity cost of holding huge amounts of high quality liquid assets in payment systems, measuring and managing intraday liquidity in real time has been a major challenge. Liquidity buffers are high quality liquid assets that banks hold to withstand short-term liquidity shocks. These assets must be easily convertible to cash without significant loss of value. When regulations require a certain amount of capital reserves to be maintained to cover exposure obligations, real-time understanding of all available sources and uses of liquidity is vital.
“UBS and others are reshaping the future of intraday liquidity,” explains Anthony Clark-Jones, product portfolio manager at UBS Investment Bank. “Today’s financial system is effective but relatively inefficient – liquidity is fragmented, buffers are oversized and there is no real marketplace for cash or collateral that lasts hours or minutes.”
Intraday USD repo exists but FX and other instruments remain static due to infrastructure constraints rather than lack of demand. A more sustainable approach – which Clark-Jones will discuss in more detail in this PostTrade 360° 2025 session on stepping up intraday liquidity– is to explore the trading of intraday FX swaps and repo, using distributed ledger technology.
“These trials simulate a world where liquidity is dynamically priced and deployed within the same day, not overnight,” he says. “We think this will unlock significant efficiencies.”
Game changer
Looking ahead, innovative mechanisms such Fnality Payment System, which enables 24/7 settlement using digital cash, could be a game changer. By enabling atomic, programmable settlement, institutional digital payment rails offer potential for banks to manage down liquidity buffers, simplify payment operations and create new revenue streams as intraday liquidity providers.
“This isn’t just digitising today’s systems — it is building next generation financial market infrastructure,” says Clark-Jones. “The potential upside for Tier 1 banks is hundreds of millions of dollars in savings through capital efficiency, risk mitigation and operational savings as well as a decisive edge in a real-time, digitally-enabled future.”
Have you signed up yet to be in Stockholm for PostTrade 360° 2025 on 3–4 September? It’s free for securities operations pros, both trading and investor sides! (Vendor firm representatives need a sponsorship agreement.) The powerful event website lets you register, see all other delegates, schedule sessions and meetings, and message. Find all related articles, including loads of teaser interviews, here.
