Finteum has completed testing of its funding platform with 19 banking groups prior to its planned release at the end of this year.
The Finteum platform is an execution facility that delivers intraday financing to the global interbank market, including intraday repo and intraday FX swaps. The recent trial, conducted over a three-day period, involved banks supporting a combined balance sheet of US$23.5 trillion, including clearing banks for six major home currencies, namely USD, JPY, EUR, GBP, CAD and CHF.
Natwest and UBS are believed to be two of the banks that have been involved in the recent trial and that are progressing with the platform integration.
Trading during the trial was conducted using a simulated settlement environment, but Finteum plans to support live real money trades later in 2023. Banks expect to go live initially using current RTGS systems to support intraday FX swaps, but the aim is to migrate these to payment-versus-payment (PvP) settlement as soon as possible in accordance with their business requirements.
By improving intraday liquidity access, this will enable banks to improve their balance sheet and financing efficiency, reducing the requirement for treasury teams to maintain large high-quality liquid asset (HQLA) buffers to support their requirement for secured financing.
The platform provides a channel through which bank teams can negotiate with each other regarding how much they should borrow and lend in each currency and over which timeframe. Bank risk teams can also apply intraday credit limits via the platform, simplifying the task of managing their counterparty risk exposures.
The Finteum platform is built on R3 Corda Enterprise distributed ledger technology protocol, enabling counterparts to exchange funds and securities without the need to communicate and reconcile MT300s or other confirmation messages. Users can also manage post-trade requirements such as ‘early maturity’ or trade cancellations via the platform.
This is designed to integrate with a range of SFT trading, post-trade and collateral management infrastructure stacks, including BNY Mellon’s triparty repo solution, Euroclear Bank’s triparty repo platform, the Eurosystem’s TARGET2-Securities centralised settlement platform, and a range of real-time gross settlement payments platforms.
This will also integrate with DLT-based systems such as HQLAx, the Fnality Payment System, Baton Systems Core-FX platform and RTGS.global.
Finteum strengthened its expertise earlier this year with the addition of Stephen Malekian as senior adviser. Malekian was previously head of securities financing at Barclays and Citi.
For further details of Finteum’s ambitions, refer to the interview with Brian Nolan in SFT Issue 305, June 2022.
