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. The new trade type promises to create super-short-term interbank markets, dramatically reducing banks’ High Quality Liquid Assets (HQLA) requirements for intraday liquidity. 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.

Finteum claims it is one of the first interbank venues to offer FX swaps and repo alongside each other in the same platform, something which is valuable to bank treasury teams, which use these two markets interchangeably for funding. Rupert Hume-Kendall, former chair of Bank of America Merrill Lynch International, who recently joined as Finteum vice-chair, comments: “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.”

A Finteum Platform trial in April for USD intraday repo with 14 global bank participants, including Barclays, NatWest and Citi, with simulated settlement, demonstrated the potential of the intraday repo market. Live Finteum Platform repo trades are expected later in 2024. The Finteum Platform, which is built to integrate with existing market infrastructures, 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. Anthony Clark-Jones, who leads the Strategic Ventures portfolio at UBS Investment Bank, says: “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.”