By Andres Oranges, Chief Operating Officer, Treasury, Société Générale
What, for you, are the benefits of attending a conference like the Liquidity Risk Management Congress and what have attendees learnt from your session?
There are many reasons to attend targeted and relevant conferences like the Liquidity Risk Management Congress including networking, learning, sharing and having fun! More specifically:
- Attending helps to provide many opportunities to network with like-minded Liquidity experts across the street,
- There are compelling subject matter materials being discussed which serve as an important tool to learn about the latest trends and how they are being used in other financial firms and why it may matter to yours,
- Allows you to share your knowledge and achievements with other liquidity professionals and bring back information you have learned to colleagues who couldn’t attend the conference,
- I am a firm believer that work should be rewarding and fun. By attending this conference, you can add a layer of enjoyment to managing your career growth by mixing a social aspect into your personal and professional growth.
The regulatory panel session amongst other topics looked at the ‘regulatory era’ of the banking industry, how banks are moving towards a more streamlined approach to managing capital and liquidity, and challenges with meeting regulatory expectations.
What are some of the current themes surrounding the regulatory landscape?
Across the street, I have heard similar themes as they relate to Treasury and Liquidity Management. At the top is the Foreign Banking Organizations anticipation of the Federal Reserve Bank EPS tailoring rule. Additionally, intraday liquidity management and liquidity stress testing continue to be hot topics and key areas of focus for many institutions.
What are the disparities between mid-sized domestic firms and FBOs?
There are quite many differences between the two. The biggest that I can speak of from my professional experience being at a domestic GSIB, a foreign GSIB and now a smaller FBO is that domestic firms went through much of the regulatory scrutiny that FBOs have had to go through a decade ago. In many respects, this has given domestic firms an advantage in being able to focus on business growth, being able to take advantage of dollar funding and costs in the U.S., innovation and efficiencies while FBOs’ focus has been on regulatory enhancements. As it relates to the EPS tailoring rule, the main differences for Category IV/‘Other banks’ and Category I-III firms includes a greater focus on NSFR and FTP methodologies; this is of course due to their designation.
How will changes to regulation impact the liquidity landscape?
Specifically, as it relates to the EPS tailoring rule, there is a broad anticipation that the rules may influence business activity per rule trigger as well as additional reporting enhancements that will need to be made for many institutions. There may be a reduction in cross-jurisdictional activity, reduction of weighted short-term wholesale funding, reduction in nonbank assets. However, this may not necessarily lead to a dramatic change in existing liquidity processes (LCR reporting, liquidity stress testing, etc).
How do you see the liquidity risk landscape changing in the next 6-12 months?
Over the course of a year the industry will see the much anticipated EPS tailoring rule being finalized, the advent of a weaker global financial market will lead to the real-time utilization of liquidity management tools, cross-border regulatory coordination, continued data and technology improvements across the industry, a greater focus on the Reference Rate Reform (LIBOR) and a greater scrutiny from regulators to address outstanding regulatory enforcement actions.