- Intraday capital markets activity – and associated regulatory and risk requirements – require banks to hold significant cash balances
- Cost of intraday liquidity significant and increasingly transparent at product and asset class level (BCBS 248)
- Earnings opportunity cost of cash needed to support interbank payments flow
- By reducing intraday cash and liquidity buffers, bilateral intraday netting could release (estimated) $1 trillion of this value
- Analysis of bank payments data (simulated netting scenarios) suggests netting could achieve 90% payments compression and c.$50-$100m P&L benefit per $100 billion netted