Mors Survey: Intra-day Liquidity Risk Projects Still Incomplete

Helsinki-based Mors Software finds that intra-day liquidity risk management projects have shown little progression over the last 12 months.

Helsinki-based Mors Software, a provider of integrated real-time treasury and risk management technology to the sell side, has published the results of its annual liquidity risk management survey, carried out between May and July this year.

The survey, which polled 82 banking professionals from twenty-six countries across the UK, Europe, Asia, Africa, the Middle East and North America, found that intra-day liquidity risk ─ the risk posed to financial institutions when market conditions make it unfavourable or impossible to trade (usually sell) a security or asset fast enough to prevent a loss ─ monitoring continues to be a priority for banks; over two-thirds of respondents monitor liquidity risk on an intra-day basis.

The survey also shows that the majority of intra-day liquidity risk projects have not yet been completed ─ most projects appear to have advanced very little compared with the corresponding period in 2012, with only a minority of banks reporting that they had completed their intra-day liquidity risk management projects.

The number of banks that have not yet determined how to proceed with development also remains at the same level as last year. Only a third of banks are able to monitor consolidated bank-level risk figures on an intra-day basis, which, according to Mors, is the standard targeted by global regulators. This result is also similar to last year's finding and shows little progress in the area.

Business benefits ─ the efficient use of liquidity and the reduction of related costs ─ remain the main incentive for monitoring liquidity risk on an intra-day basis, followed by regulatory compliance, according to the survey.

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