UBS and CIBC execute world’s first intraday FX swap via Finteum Platform
30 July 2024 - 6:01PM
UK Regulatory
UBS and CIBC execute world’s first intraday FX swap via Finteum
Platform
- New trade type promises to create super-short-term interbank
markets, dramatically reducing banks’ High Quality Liquid Assets
(HQLA) requirements for intraday liquidity and boost their dynamic
access to funding
- Trade negotiated on the Finteum Platform, which uses R3’s
Corda, and executed on the TP ICAP UK MTF, with Finteum also acting
as the arranger
- Innovative trade flow solution enables transactions that have
been arranged off-venue to be executed and registered on an
MTF
LONDON, July 30, 2024 (GLOBE NEWSWIRE) -- UBS and CIBC have
settled the world’s first intraday FX swap to be executed on a
regulated venue. The EUR/USD intraday FX swap, negotiated using the
Finteum Platform and executed on the TP ICAP UK MTF, was completed
within minutes. Both legs of the swap were settled by the banks at
pre-agreed times, within the same business day on T+0.
With further banks preparing to execute similar transactions
this year, this new approach promises to deliver a very significant
saving for major banks. Given there are few solutions to control
the receipt of funds within a settlement window, bank treasury
teams maintain large buffers of High Quality Liquid Assets (HQLA)
for intraday. Holding this HQLA is particularly expensive, partly
due to interest rates falling more slowly than previously expected
and it is estimated to cost up to $75m per year for a large
bank.
The distributed ledger technology (DLT)-enabled Finteum Platform
specialises in trades that last hours instead of days, avoiding
unnecessarily long trades, thereby enabling banks to meet customer
obligations more quickly, reduce their HQLA requirements and meet
increasing regulatory expectations to fund payment activity in
real-time.
Rupert Hume-Kendall, former Chair of Bank of America Merrill
Lynch International, who recently joined as Finteum Vice-Chair and
as a board member, said: “Recent regulatory focus has highlighted
the need for banks to have access to multiple tools and sources of
liquidity. Intraday FX swaps and intraday repo are recognised to be
an increasingly important part of liquidity management strategies
at global banks and we’re excited to be working with many of the
world’s largest banks to bring this new technology to fruition and
reduce their costs.”
Finteum recently became FCA registered as an appointed
representative, enabling the Finteum Platform to be used for
arranging interbank transactions. The innovative trade flow
solution utilised by Finteum and TP ICAP enables transactions to be
arranged off-venue and subsequently executed and registered on an
MTF.
Adam Roberts, Head of Post Trade Solutions, EMEA, TP ICAP, said:
“This groundbreaking achievement enables partner banks to realise
significant capital efficiencies and demonstrates our commitment to
partnering with exciting new fintechs to drive financial market
innovation. TP ICAP is committed to working with exciting start-ups
like Finteum to bring new and innovative trading solutions to our
customers.”
A Finteum Platform trial in April for USD intraday repo with 14
global bank participants, with simulated settlement, demonstrated
the potential of the intraday repo market. Live Finteum Platform
repo trades are expected later in 2024.
The Finteum Platform uses R3’s Corda, an open, permissioned,
distributed platform for regulated markets. DLT enables both
parties to a trade to send money and securities to each other,
without needing to exchange and reconcile MT300 or similar
confirmation messages. Post-trade actions such as 'early maturity’
or cancellation of a trade are also agreed through the Finteum
Platform.
Kate Karimson, Chief Commercial Officer at R3, said, “R3’s Corda
is designed for regulated markets, facilitating interoperability
and integration. We are pleased to be supporting another innovation
in market structure with the launch of Finteum’s intraday FX swaps
and intraday repo solution, which will maximise the efficiency of
this exciting new market.”
The banks using Finteum are settling the trades using existing Real
Time Gross Settlement (RTGS) systems for intraday FX swaps. Finteum
is built to be able to integrate with any market infrastructure,
including RTGS systems, T2S, as well as DLT-native technology such
as the Fnality Payment System, HQLAX, Partior and
OSTTRA’s PvP Settlement Orchestration solution. Member banks plan
to transition FX swap settlement from RTGS systems to "Payment vs
Payment" solutions, when appropriate.
Anthony Clark-Jones, who leads the Strategic Ventures portfolio
at UBS Investment Bank, added, “this world-first trade over Finteum
is another step towards institutions and their partners realising
the commercial, risk-associated and client-related benefits of
truly digital capital markets, and compliments recent progress
elsewhere with, for example, institutional digital cash and digital
collateral.”
Finteum is building out the second wave of banks that will go
live on the platform in 2024 and will start benefiting from
intraday markets. Incentive structures are in place for second wave
banks. If you would like to set up a call or demo, please contact
the Finteum or TP ICAP team.
About Finteum
Finteum is a London-based start-up and has built an interbank
funding order and trade management platform. The Finteum Platform
is built for intraday funding, using FX swaps and repo as financial
products.
Contact Finteum:
Brian Nolan
+44 (0)7849231644
brian.nolan@finteum.com
About TP ICAP
TP ICAP Group plc is a financial services firm headquartered in
London, United Kingdom. Its stock is listed on the London Stock
Exchange and is a constituent of the FTSE 250 Index.
Contact TP ICAP:
Tom Gilbert, Communications Director
+44 (0) 203 933 0655
Thomas.Gilbert@tpicap.com
About R3
R3 is a leading provider of Digital Currency, Digital Asset and
Interoperability solutions. R3 supports Central Banks, Corporates
and FMIs by providing them with the tools to navigate the
complexities of digitization. R3 is committed to progressing
financial markets. For further information, please visit
www.r3.com.
Contact R3
Katy Jones
Eterna Partners for R3
R3@eternapartners.com
References:
https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2018/june/Intraday%20Liquidity%20Final%20Report.pdf
https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2022/jun/Sept-Intraday-Liquidity-Report.pdf
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/fe9f8c35-e571-445f-9dc7-ae86846d8608