Creating common practices with the LITF Intraday Liquidity Reporting rule book to comply with BCBS 248
LITF has developed with the support from SWIFT an Intraday Liquidity Reporting rule book to support compliance with BCBS 248.
In April 2013 the BCBS (Basel Committee on Home Supervision) issued its "Monitoring tools for intraday liquidity management" (BCBS 248) which outlines quantitative reporting requirements to be implemented by internationally active banks between 1st January 2015 and 1st January 2017. The tools require banks to report retrospectively on their intraday liquidity flows. It's also expected that more National regulators will request their banking communities to provide evidence that they manage their liquidity flows in real-time.
With this in mind the Liquidity Implementation Task Force (LITF), an industry group formed by twenty five large clearing banks, custodian banks and global brokers, has developed with the support from SWIFT an Intraday Liquidity Reporting rule book to support compliance with BCBS 248.
The Intraday Liquidity Reporting Rulebook aims to establish a common set of global best practices in the Nostro and Custodian space regarding the use of SWIFT intraday liquidity reporting messages which will help alleviate the four most common issues:
- Too few transactions reported on a real-time basis, especially in the Nostro space.
- Lack of timeliness of reporting.
- Lack of granularity of information provided and more specifically the lack of “time stamped” information.
- Lack of common definition and business practice of the current message types commonly used by the industry (FIN Cat9 messages).
To this end the LITF rule book establishes common minimum requirements that all account servicing institutions should be fulfilling. It describes nine key principles that Service Providers should implement to provide their financial institution customers with the underlying information needed to build the Nostro-related metrics requested by regulators in different jurisdictions.
The Intraday Liquidity Reporting rule book also outlines three implementation models to best respond to the potential specific requirements from different national regulators.
Based on these models, institutions will be able to define the precise set of messages needed for their intraday liquidity dashboard for reporting and/or management purposes, and the specific timing required to access the data. All nine principles of the rule book describe the applicable requirements related to these implementation models.
To help ensure broad adoption by the industry, the LITF rulebook is now being shared with the Payments Market Practice Group (PMPG) for their endorsement and to add reference to the LITF rule book into the next version of the SWIFT Standards Handbook.
Dennis Sweeney, Managing Director, Société Générale Newedge UK Limited, says: “The task force has done tremendous work to translate the new intraday liquidity regulatory imperatives into detailed cash and liquidity reporting requirements. The LITF rule book is a very comprehensive document that should become the new default industry best practice supported by a majority of service providers. This should definitely help banks improve their real-time liquidity management and implement the new BCBS reporting tools.”
Catherine Banneux, Senior Market Manager, SWIFT, says: “The industry as a whole should benefit from this collaborative approach as it should help increase the pace at which progress is being made towards reporting readiness. It should also facilitate consistency in data management and help reduce overall implementation costs.”
Download a summary of the LITF rule book :
To receive a full copy of the LITF rule book, please contact Catherine Banneux.