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Industry roundup: 7 May

Standard Chartered launches domestic cash management services in Europe

Standard Chartered has launched a full range of cash management services out of London and Frankfurt covering the UK and Eurozone countries, following its investment in a new cash management infrastructure.

With the infrastructure now complete, and in addition to existing high-value clearing, transactional FX and pooling services the bank already offers, the additional services include; virtual accounts, enhanced pooling and liquidity services, API capabilities, low value clearing and UK Faster Payments.

"We are offering a wide range of opportunities to existing and new clients, from setting up operating subsidiaries to running regional or global treasury centres, trading centres, or investment arms in Europe," commented Philip Panaino, global head of Cash Management at Standard Chartered. "We are not only aiming to serve our European client base, but also our Asia, Africa and Middle East clients who are looking to do more business in to Europe."

The bank says it is also providing solutions for the needs of central treasuries, in-house banks, trading centres and billing hubs operated by its clients, including global pooling structures.

"This is a transformational development as we begin to offer this enhanced cash management service across our global footprint, reinforcing Europe as a key location to access our unique network, which enables us to further support our clients and their business," said Karin Flinspach, regional head Transaction Banking, Europe and Americas at Standard Chartered.

 

ARRC identifies market indicators for a forward-looking SOFR term rate

The Alternative Reference Rates Committee (ARRC) has published a set of market indicators that it will consider in recommending a forward-looking Secured Overnight Financing Rate (SOFR) term rate. The ARRC has long recognised that a forward-looking term SOFR rate will be a useful tool to support the transition away from LIBOR.  

The publication of the indicators builds on the ARRC’s March 23 update, ongoing ARRC discussions, and term rate principles, and provides clear guidance that would allow the ARRC to recommend a SOFR-based term rate relatively soon. The indicators are designed to measure progress in establishing deep and liquid SOFR derivatives and cash markets - which are essential to a robust and stable term rate.

"The market indicators outlined today are clear and achievable," said Tom Wipf, ARRC chairman and vice chairman of Institutional Securities at Morgan Stanley. "Given recent market progress, I am optimistic that they can realistically be met soon as market participants continue to accelerate their move away from LIBOR to SOFR derivatives."

The market indicators the ARRC will consider in order to recommend a term rate are:

  • Continued growth in overnight SOFR-linked derivatives volumes.
  • Visible progress to deepen SOFR derivatives liquidity, consistent with ARRC best practices:
  • Offering electronic market-making and execution in SOFR swaps and swap spreads.
  • Changing the market convention for quoting USD derivative contracts from LIBOR to SOFR.
  • Making markets in SOFR-linked interest rate volatility products (including swaptions, caps, and floors).
  • Visible growth in offerings of cash products, including loans, linked to averages of SOFR, either in advance or in arrears.

These outlined steps should help further establish SOFR derivatives markets, and provide borrowers a range of choices based on SOFR. The ARRC has not yet recommended any forward-looking SOFR term rate or administrator, and will continue to consider the proposals submitted to its RfP in order to do so. Given US supervisory guidance, the ARRC continues to encourage market participants not to wait for a term rate and to make use of current SOFR conventions available now.

 

Fed invites comment on proposals to evaluate requests for accounts and payment services 

The Federal Reserve Board has invited public comment on proposed guidelines to evaluate requests for accounts and payment services at Federal Reserve Banks (Account Access Guidelines).

Recent years have seen the introduction of new financial products and delivery mechanisms for traditional banking services, notably leveraging emerging technologies, including from institutions with novel types of banking charters designed to support such innovation. To facilitate these activities, some such institutions have requested access to the payments system offered by Federal Reserve Banks. To help achieve the goal of applying a transparent and consistent process for all access requests, as well as considering the ramifications for the broader financial system, the Board is proposing Account Access Guidelines for the Reserve Banks to evaluate such requests. These guidelines take into account the Board's legal authority and reflect an analysis of its policy goals.

"With technology driving rapid change in the payments landscape, the proposed Account Access Guidelines would ensure requests for access to the Federal Reserve payments system from novel institutions are evaluated in a consistent and transparent manner that promotes a safe, efficient, inclusive, and innovative payment system, consumer protection, and the safety and soundness of the banking system," said Federal Reserve Board governor Lael Brainard.

 

Tide prepares tool for small businesses to tackle late payments

Tide, a UK-based financial platform for business, has announced it will launch a new Invoice Assistant in mid-May to give small businesses the tools they need to get paid, and get paid on time.

The negative impact of late payments on small businesses has been well documented, with Tide’s research revealing that small businesses spend 1.5 hours per day, on average, chasing late payments and that each small business has an average of £8,500 owed to them in late payments at any one time. Tide has also found that it’s members spend 3-4 hours per week on creating invoices and managing expenses on spreadsheets. 

Tide is addressing these pain points with a package of tools and services to help small businesses reduce time spent on getting paid and reconciling payments. The solution includes:

  • Automatic invoice chasing - automated reminder emails for unpaid invoices.
  • Automatic invoice matching - notifications sent as soon as you are paid, payments automatically linked to invoices for easy bookkeeping.
  • Invoice Direct Debits - get paid automatically as soon as the invoice is due (provided by GoCardless).
  • Invoice protection - protect yourself against the risk of non-payment (insurance provided by Hokodo).

The Invoice Assistant will cost £10 + VAT per month and is an add-on to the free invoice raising service available to all Tide members. The company says that testing of the automatic invoice chasing feature has revealed that invoices are paid at least 4 days earlier when they are chased by an automatic email.

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