T0 Intraday Liquidity Management

Atomic settlement of cash transactions using automated "smart contract" programs.

20 years of financial service sales and operations experience at Citi, JP Morgan

https://www.e2eblockchains.com/about-1

1. What is the problem?
Treasury Liquidity Managers (Corporate and Bank Finance departments) cannot settle liquidity transactions intraday using available options such as repo, commercial paper and margin because existing cash settlement systems do not provide enough time for same day matching, reconciliation or exception processing between both parties of the transaction. Specifically, they cannot open positions, process funding/collateral, close positions and return funding/collateral all in the same day. This requires Treasury Operations to hold their funding positions overnight in a best-case scenario or hold positions for several days in worst case.
2. Why is it a problem?
Treasury Managers must "guess" the amount of their future funding requirements and cover this possible requirement using an intraday "buffer" of cash and collateral that is locked up for the duration of the liquidity funding transaction. The annual cost of funding an intraday "buffer" is estimated to be $1MM-3MM per $1B avg daily buffer amount (overnight funding). Longer funding has higher annual funding costs. See Liquidity saving calculator below.
3. How do you plan on solving it?
Using a Stablecoin equivalent to fiat currency (such as USDC), counterparties will be able to program the execution and settlement of their opening and closing transactions to coincide with their intraday funding needs. A distributed ledger technology (such as Cardano) allows for atomic settlement of transactions using automated "smart contract" programs. A stablecoin equivalent for fiat currency allows the same "smart contract" programmability to be used for the atomic transfer of cash (once the collateral is confirmed) and the intraday atomic return of cash plus interest (once the funding parameters are met). Aside from the USDC, Fnality International has also created the Fnality Global Payments (FnGP) solution to hold reserves at Central Bank accounts. (USD, CAD, GBP, EUR, JPY are first 5 currencies to be settled as Utility Settlement Coin (USC). Mainnet implementation is dependent on the Central Bank accounts opened in the name of Fnality International.)
4. Why does it solve it?
Atomic settlement removes the need for matching and reconcilement to open the position (with settlement finality). The smart contract removes the need to create and reconcile a reverse transaction to close the position (this is already programmed in the opening transaction). Atomic settlement again removes the need for matching and reconcilement to close the position (with settlement finality). In fact, this has already been successfully implemented for "security" transactions, but cash still requires the legacy reconciliation and funding rails (SWIFT, ACH, Fedwire, etc.). Example attached from Banco Santander bond issuance. The SUSD settlement in this transaction is comparable to USC, USDC or equivalent stablecoin. The tokenization and de-tokenization for SUSD is not required for settlement to occur. This is ancillary step only if firm does not want to maintain the stablecoin on their books.
5. Additional reference:
Other banks have created a sort of proprietary DLT cash settlement (Deutsche Borse and Commerzebank settled a repo transaction with Clearstream as the cash token provider). All of them are unique to the depository bank.
Our solution links the offerings with a monitoring and trading venue application, similar to existing platform such as Blackrock's Aladdin and SS&C Net.
How success looks like
All systems can use our service as an API. Our solution is built on Cardano, attracting users and developers to build integrations and create more adoption of Cardano. The solution will be built as a global service by interacting with all country's stablecoins. Payment of the transaction fees will be made in ADA, costing much less than current ETH gas prices using, Hyperledger BESU.
Developers can use Cardano to create native tokens that will interact with our service, such as the SUSD in the example.
This solution connects businesses that require funding with organizations that have funding available. These organizations can benefit through reduced funding costs, increased earnings on available cash, more reliability in settlement time.

Key metrics: Cooperate with other projects as well.