Interagency Funds Transfer Pricing guidance

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March 2016

Overview

Last week, US regulators issued their long-anticipated guidance on funds transfer pricing (FTP) for large banks.

Although FTP has long been used by banks to attribute and measure performance internally, its use for business line and product liquidity risk management has only come into focus since the 2008 financial crisis. The guidance formalizes this approach for the first time, solidifying FTP’s place on the agenda for balance sheet risk management.

  1. FTP processes must be transparent and consistent across the institution.
  2. Banks should prepare FTP reports.
  3. FTP oversight needs to be improved.
  4. Contingent liquidity risk is now officially brought on stage.
  5. Implementing the guidance will require enhanced data capture and analysis capabilities.

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Dan Ryan

Partner, PwC US

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