19 banking groups have participated in a series of integration trials on the Finteum intraday platform that began in June this year. Simulating intraday FX swaps and intraday repo contracts, the trials were observed by national prudential authorities. Finteum has announced in a press release that it is targeting live real money trades by the end of 2023. Several participants, including UBS and NatWest plan to go live with the system.
The latest test in the trial, which lasted three days, investigated the business case and market structure for intraday markets. It included a diverse group of large and mid-sized global organisations and clearing banks for six different currencies – CAD, CHF, EUR, GBP, JPY, and USD. The combined balance sheet of the 19 participating banking groups is USD23.5 trillion.
Finteum describes its platform as “an execution venue that brings intraday funding capabilities to the global interbank market”. It is powered by the Corda Enterprise DLT protocol by R3. All data will be stored on a ledger that is only visible to the parties in the trade and no one else.
Banks integrating with Finteum will be going live using existing Real Time Gross Settlement (RTGS) systems for intraday FX swaps. On the advice of its users, Finteum has built a capacity functionality that allows bank teams to coordinate how much of each currency could be borrowed or lent, and for which hours. Intraday credit limits can also be set to manage intraday counterparty credit risk.
Recent bank failures have highlighted the need for banks to have access to multiple tools and sources of liquidity and prompted the Federal Reserve to consider intraday liquidity risk management as a supervisory priority for this year.