Baton’s new tools help banks meet prudential intraday liquidity obligations and reduce intraday liquidity buffers, costing many firms hundreds of millions of dollars annually, by optimising liquidity management processes and capital returns
Baton Systems, a global capital markets tech provider orchestrating the optimised settlement of $20-30 billion (USD) in asset value daily, has introduced new treasury management tools designed to optimise intraday liquidity, reduce costly buffers and mitigate risk in real-time. The new liquidity management capabilities offer firms a means to dramatically reduce their financing costs which have been elevated by interest rate normalisation. These tools also provide a future-proofing way to address the heightened regulatory focus on financial resilience following 2023’s tumultuous market events.
Lacking real-time information, an understanding of past liquidity behaviour, and the ability to control the release of individual payments effectively, treasury teams have until now struggled to accurately predict and optimise intraday liquidity use. As a result, they have been unable to effectively identify and repurpose available cash and securities, plan for intraday liquidity demands or accurately track intraday financial health. These factors have restricted their ability to test and implement strategies to reduce funding needs, divert available liquidity towards revenue-generating activities and proactively mitigate liquidity risk.
The launch of these tools comes as the industry continues to assess performance through the recent global equity market sell-off and to explore how liquidity resilience can be better managed during future periods of volatility. During such events, banks need immediate access to critical data detailing current balances, exposures, and obligations and the ability to act quickly on this insight, underscoring the necessity for strong intraday liquidity management tools.
Baton’s new tools provide treasury managers with a dedicated dashboard with real-time insight into how individual counterparties are impacting liquidity across all business lines. By providing real-time firm-wide visibility and control across all available liquidity sources, these tools enhance forecasting, allow for more informed decision-making and the swift adjustment of liquidity strategies.
Treasury managers can instantly access critical real-time data to proactively adjust capital allocations and rapidly reactivate available capital. Furthermore, they can analyse individual liquidity flows and trace contributing factors to better understand how different events impact their own liquidity profiles and those of their counterparties.
By integrating real-time data with historical models, this insight can be used to automatically adjust and optimise payment strategies as the day’s events unfold and to instantly detect deviations in market or counterparty client behaviour, highlighting a potential credit crunch or liquidity issues.
Using counterparty-specific historical data, treasury managers can also predict the timing of inbound payments and intraday liquidity demands. The tools will then recommend how outbound payments can be optimally and intelligently sequenced and scheduled to lower funding costs. Additionally, the tools include stress testing capabilities, allowing treasury managers to evaluate the impact of different scenarios on liquidity and ensure counterparty and throughput obligations are met even in the most challenging conditions.
Arjun Jayaram, Founder and CEO of Baton Systems, highlighted the importance of these new tools: “Recent market events underscore the urgency for a significant shift towards real-time treasury management. With regulators more focused than ever on financial resilience, we’ve designed these tools to enable treasury managers to develop more robust liquidity strategies, to easily access the critical information needed to make informed decisions fast and rapidly adjust strategies to effectively respond to and proactively optimise resources as market conditions change.”
This new functionality, available now, integrates seamlessly with Baton’s Core-Payments® solution – allowing Baton’s clients to transform how they manage intraday liquidity with the flexibility to configure the tools to meet their firm’s specific requirements.
