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Market Research Report

Liquidity Risk Management After the Crisis: More Important Than Ever

Published by Ovum (TMT Intelligence, Informa) Product code 166551
Published Content info 30 Pages
Delivery time: 1-2 business days
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Liquidity Risk Management After the Crisis: More Important Than Ever
Published: January 13, 2011 Content info: 30 Pages
Description

Abstract

Introduction

This report looks at the market for Liquidity Risk Management technology against a backdrop of increasing demand for this capability in the wake of the global financial crisis.

Features and benefits

• Identifies the key vendors and outlines the approaches to achieving appropriate LRM.

Highlights

Banks are obliged to take a critical look at their risk management systems to see what they already have in place and what else they will need to implement to meet these regulatory requirements, and beyond that to use an LRM infrastructure to run their businesses better.

Your key questions answered

• What are the key trends in the industry?
• What are banks looking to achieve with LRM technology and what are the options open to them?

Table of Contents
Product Code: OI00039-028

Table of Contents

SUMMARY


Catalyst


Ovum view


Key messages


Banks' liquidity management platforms failed in the crisis


Liquidity risk derives from credit, market, or operational events


Liquidity risk has broader requirements than ALM


Funds transfer pricing is becoming a requirement for liquidity risk


LRM is unlikely to be a rip-and-replace exercise so integration is key


Vendors should adopt a consultative approach to LRM



MARKET CONTEXT: LIQUIDITY RISK IS TOP OF MIND


The liquidity crisis


Banks' liquidity management platforms failed in the crisis



BUSINESS FOCUS: LIQUIDITY IS ON THE REGULATORY AGENDA


The Liquidity Coverage Ratio addresses short-term funding


High-quality liquid assets


Run-off rates


The NSFR addresses medium and long-term funding


Liquidity risk derives from credit, market, or operational events


Internal sources


External sources



TECHNOLOGY FOCUS: LIQUIDITY MANAGEMENT GOES BEYOND ALM


Liquidity risk has broader requirements than ALM


Stress testing


Contingency planning


Collateral management


Diversification/limits management


Funds transfer pricing


FTP is becoming a requirement for liquidity risk


[Missing title]



RECOMMENDATIONS


Recommendations for enterprises


Watch what the UK is doing and liaise with your own regulators


Prioritize the formulation of an LRM philosophy over technology choices


Once the philosophy has been established, audit what you have in place


Consider ways of turbo-charging existing infrastructure


Recommendations for vendors


LRM is unlikely to be a rip-and-replace exercise, so integration is key


Adopt a consultative approach to LRM


Follow Basel III and partner for localization


Alternative views



APPENDIX


Further reading


Methodology


Author


Ovum Consulting


Disclaimer



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