US corporate cash allocations to bank deposits drop to 47% 

Less than half (47%) of US organisations’ cash and short-term allocation is maintained in bank deposits, according to the 2023 Association for Financial Professionals (AFP) Liquidity Survey, underwritten by Invesco. This figure is down 8% from 2022 and is the lowest recorded in four years.

In response to the bank failures that occurred in March 2023, organisations began moving their cash and short-term investments from banks into government/Treasury money market funds (up 4%), Treasury bills (up 2%) and agencies (up 2%).

Some 38% of treasury professionals report that their organisations plan to continue increasing their cash allocations to government/Treasury MMFs next year. In comparison, only 8% indicate that their companies plan to decrease allocations to these funds. However, 27% plan to increase allocations in bank deposits, while 25% want to decrease their deposits in banks.

An organisation’s overall relationship with its bank remains the primary determinant in choosing where to maintain deposits (cited by 83% of respondents). However, this figure is down 10% from 2022. It suggests that treasury professionals are more cautious in their approach to relationships with banking partners in response to recent bank failures.

The survey also found that ESG parameters influence almost half of organisations’ investment policy revisions, with 27% adding ESG parameters/mandates and 21% adding ESG Money Funds in their investment policy.

Despite a tumultuous environment, the three primary investment objectives reported by treasury professionals remain consistent with those of 2022: safety (63%), liquidity (33%) and yield (4%). However, when choosing a US domestic prime/floating NAV Fund, yield (cited by 50% of respondents) continues to be the primary selection criterion. This figure is down from the 68% reported in 2022. In turn, the share of respondents who select a fund based on the ease of transaction process rose 17% to 38%.

 

J.P. Morgan launches sustainable investment data solutions for institutional investors

J.P. Morgan Securities Services has announced the launch of its Sustainable Investment Data Solutions for institutional investors, available through Fusion by J.P. Morgan. The solution aims to enable investors to readily extract value from sustainable investment data supplied by providers through technology-enabled normalisation, management, calculation, and screening capabilities.

By partnering with data providers, including Bloomberg, Equileap, FactSet, ISS ESG, MSCI, RepRisk, Revelio Labs, S&P Global, and Sustainalytics, the bank says that Fusion has reimagined the sustainable investment process delivering a highly differentiated and cost-effective solution for investors. 

The new solution is designed to provide consistency, supporting sustainable investment data cross-compatibility across providers. Data is enriched with common identifiers and delivered in standardised formats to allow easy joining between datasets. Investors can load and manage multiple company hierarchies. They can define their data propagation rules, which are used to generate new datasets. Users can create and manage their investable universes' inclusion and exclusion criteria and run screens on pre-defined schedules. Investors can also calculate customised metrics, which are then made available for hierarchy propagation and screening.

“Data for sustainable investing is particularly challenging given its scale, inconsistency, and incompleteness,” said Gerard Francis, Head of Data Solutions, J.P. Morgan. “We are pleased to work with our providers to deliver a unique and transformative solution for investors.”

 

Canadian real-time payments delayed again

Payments Canada has announced another delay to implementing its real-time payments system, Real-Time Rail (RTR). Current delivery delays, unrelated to the exchange technology components, are impacting the launch date of the RTR. To understand and mitigate any future delays in the remainder of the programme, Payments Canada, with the support of its board and regulators, will now undertake a targeted review of risks identified in the delivery of the RTR.

During this review period, vendor delivery activities will continue while Payments Canada will suspend or shift the focus of some RTR programme activities. The review will take approximately three months to complete, and Payments Canada expects to provide an action plan for the path forward at that time. The payments association says this will support delivery certainty for the programme.

Earlier this year, Payments Canada engaged a third party to review delivery assurance. The delivery assurance review focused on program management, people and process. This review, completed in Q1, confirmed that Payments Canada is well positioned to continue leading the programme effectively and recommended additional testing and investments to enhance ongoing operations once the RTR system goes live. 

In a statement, Payments Canada acknowledged that timelines have shifted since the RTR program was launched and the implications of delays to the payment ecosystem. By working with its regulators and member financial institutions, Payments Canada says it will deliver a real-time payment system that will benefit all Canadians. 

 

Citi launches sustainable deposits solution for Indian institutional clients

Citi has announced the launch of a sustainable time deposit solution in India, designed to assist institutional clients when investing excess cash while supporting their sustainability goals. The solution reflects the growing interest in sustainable investment, products and services from clients. India is the third market in Asia Pacific after Singapore and Hong Kong to launch this product for clients, expanding Citi’s program that now serves clients across Europe, the Middle East and the US.

The funds deposited in this product, offered by Citi in India, will support projects identified under the Citi Social Finance Framework. The funds will be allocated by Citi to finance or refinance assets in a portfolio of eligible social finance projects, including those expanding access for low-income and underserved communities across affordable basic infrastructure, affordable housing, economic inclusion, education, food security and healthcare.

The sustainable time deposit solution is the latest addition to the suite of sustainable products introduced by TTS in India, including sustainable supply chain financing and sustainable trade loans.

“The sustainable deposit solutions that were launched in Hong Kong and Singapore last year have proved to be a popular investment option for our finance and treasury clients to date,” said Sandip Patil, Asia Pacific Head of Liquidity Management Services and Digital Assets, Treasury and Trade Solutions, Citi.

 

Consortium delivers first cross-border quantum-secure digital trade transaction

An international consortium of industry and technical experts, supported by government, business and other organisations, has completed the world’s first quantum-secure cross-border electronic trade document transaction, delivering a verifiable, secure, and legally recognisable solution for future digital trade transactions. The successful pilot, orchestrated by the International Chamber of Commerce UK and Centre for Digital Trade and Innovation (C4DTI) on behalf of the UK government, and supported by the Singapore government agency, the Infocomm Media Development Authority (IMDA), saw sample building products transported from the UK to Singapore using traditional paper documentation, but also electronic trade documents, including an electronic bill of lading (eBL) and a digital promissory note, simultaneously reconciled using a Distributed Ledger (DLT) in both jurisdictions.

IMDA's TradeTrust framework, which is fully compliant with the UN's Model Law on Electronic Transferable Records (MLETR) and allows end users to transfer, endorse, and verify documents and effect title transfer across different digital platforms seamlessly, was utilised in the eBL flow of the transaction. A quantum-secure ‘seal’ was placed around the electronic trade documents using Arqit's symmetric key agreement and quantum notary technology, ensuring that the documents were protected from current and future cyber threats, including the risk posed by quantum computers.

The shipment was live tracked, and the condition of its contents was monitored throughout the journey using low-cost, secure IoT technology developed at the AESE Laboratory, Imperial College London, led by Professor Julie McCann and supported by the PETRAS National Centre of Excellence for IoT Systems Cyber Security and the UKRI Impact Initiative Account (UKRI-IAA). A tamper-resistant digital record of the location and state of the physical goods was minted onto an NFT by Database of Native Assets Ltd (DNA), using the IoT sensors and Kadena blockchain technology to provide additional security for the shipment in transit.

The pre-existing shipment, used as a basis for the pilot, was dispatched by water management systems component manufacturer Permavoid (part of the Genuit Group) to Singapore. Specialist consultancy AG Midgley established and chaired the consortium from inception to completion, with legal guidance and advice being provided by energy and transport law firm Watson Farley & Williams LLP (WFW) in London and Singapore in association with Wong Tan & Molly Lim LLC (WTL). As part of the project, the use of electronic trade documents is the subject of legal review by WFW, which has advised that the eBL and digital promissory note used in the project satisfy the requirements of the UK's Electronic Trade Documents Bill as regards possession and transfer of possession. WFW Singapore, in association with WTL, will advise on applying Singapore's Electronic Trade Act. Both pieces of legislation are based on the UN's MLETR being enacted globally.

 

Trezy secures US$3m in seed funding for AI-based cash management tool

European fintech Trezy, which aims to partner with 10 million small business owners worldwide to simplify financial management and overcome the challenges that hinder growth in the competitive business world, has secured US$3m in seed funding.

The fintech’s financial forecasting and cash flow management tool offers real-time financial reporting driven by intelligent AI-based classification of bank transactions, receipts, and invoices. Trezy says it has deliberately engineered it to strike the perfect balance between detail and abstraction, combining bank transaction data with accounting data. With a foundation of 14 million accounting entries and 2 million bank transactions, the firm says its platform ensures accuracy and reliability.

The new funding round included investors such as Playfair Capital, Seedcamp, and Sumup. With the seed funding, Trezy plans to advance market expansion in Europe, democratise financial information, and automate the generation of business insights.

“Trezy's innovative approach to combining bank transaction data and accounting data, along with their AI-driven technology, has the potential to revolutionise the way businesses make informed financial decisions,” commented Henrik Wetter Sanchez, Partner at Playfair Capital.

 

R3 launches next generation of Corda

R3, the enterprise distributed ledger technology (DLT) and services firm, has announced the next generation of its platform Corda. The updated version has been designed for global financial market infrastructure providers and central banks to enable applications to interoperate seamlessly and securely across other open enterprise DLT networks.

R3, in partnership with Adhara, has also launched a Hyperledger Foundation Lab – Harmonia – to accelerate the development of interoperability protocols for regulated financial institutions. Harmonia will address the constraints and requirements of regulated financial networks to achieve actual atomic settlement across blockchain networks. It was informed by HQLAX and Fnality, which demonstrated the world’s first proof of concept trustless atomic DvP (Delivery versus Payment) repo settlement between Corda and Hyperledger Besu. The firm says this will bring regulated markets closer to safe and secure enterprise DLT interoperability.

“We believe this economy will be built upon an interconnected ecosystem of multiple DLT platforms, where apps will transact seamlessly and securely across networks – not isolated or walled gardens of ‘public’ or ‘private’ networks,” commented R3 Co-Founder and Chief Strategy Officer, Todd McDonald. “We are already seeing demand for Corda’s enhanced capabilities from central banks exploring CBDCs for cross-border payments and wholesale settlement.”