One of the clearest signs that funding markets are evolving is that platforms are beginning to introduce genuine price discovery in intraday funding.
Finteum is a London-based platform focused on helping banks manage intraday liquidity by allowing them to borrow and lend cash using intraday FX swaps. The platform, which originally started off focused on intraday repo, recently reached roughly $1 billion in weekly intraday FX swap trades, with major institutions including Goldman Sachs, UBS and NatWest increasing activity — a milestone that reflects growing demand for tools to manage funding continuously rather than overnight.
As Finteum Co-founder and CEO Brian Nolan told The Peg last week, “the price discovery happens on Finteum,” with trades negotiated between banks and then settled through existing payment systems.
The shift toward FX swaps rather than repo is not accidental. Part of the reason is practical.
FX swaps allow banks to mobilize liquidity across currencies using infrastructure they already rely on for treasury and FX funding, which makes them easier to integrate into existing workflows. Nolan says intraday funding naturally divides into two segments —“intraday FX swaps and intraday repo… and it’s intraday FX swaps that the banks are doing today” — because FX swaps provide a practical way to move liquidity where it is needed without waiting for new repo plumbing to mature.
That matters because intraday liquidity demand is not static. Banks may be borrowers in the morning and lenders by the afternoon, reflecting settlement cycles, margin calls, and cross-currency flows. As Nolan observed, “it can be a case of, we need some sterling in the morning, but we can sell some sterling in the afternoon… the same bank can be on two sides within the same 24-hour period.”
In other words, liquidity demand is dynamic and continuous, not neatly segmented into overnight intervals. Nolan compares the emerging structure to electricity markets, where supply and demand are balanced continuously through auctions:
“One of the analogies that I keep talking about is… how the wholesale markets for electricity work,” he explains. “You have an auction every 45 minutes… and basically that’s the mechanism to get the amount of electricity… to where it’s needed in an efficient way.”
In electricity markets, consumers are already seeing the effects of such dynamic pricing. With smart meters, households can observe when electricity is cheap and when it is expensive, adjusting consumption accordingly. Nolan suggests a similar structure is likely to emerge in funding markets, though at the interbank level rather than the retail one.
Nolan suggests a similar structure is likely to emerge in funding markets, though at the interbank level rather than the retail one.
The reason is straightforward: liquidity demand is not constant across the day. It clusters around predictable operational events — margin calls, settlement windows, payment cut-offs, and large clearing flows. Nolan notes that there are already identifiable pressure points in the daily cycle. For example, “there will be times of the day that are busy because of different factors, like… LCH margin calls… that will be a… relatively expensive time of the day.”
In other words, the plumbing of the financial system already runs on a daily rhythm. Liquidity demand surges at certain hours, then recedes. What is missing today is a market structure capable of pricing those swings in real time.
The goal, as Nolan describes it, is to reach a stage where banks can “very actively move intraday liquidity between themselves within the system” and ultimately “make a proper market out of it.”
If that happens, the funding curve would no longer be a single overnight rate but a series of intraday prices — peaking during known stress windows and easing when payment flows subside. In effect, money markets would begin to resemble electricity grids: continuously clearing systems in which price signals direct scarce resources to where they are needed, precisely when they are needed at regular intervals throughout the day.
The result should be a market that responds fluidly to the natural ebb and flow of liquidity throughout the system, emulating a type of rhythmic breathing effect. One of our favorite charts demonstrating this effect was published by the BIS in a piece about intraday liquidity management, in April 2013:
The fact Finteum is making headway with major institutions indicates banks themselves appear to prefer market-based interbank mechanisms as their first source of funding, even when central-bank facilities are available. As Nolan put it, institutions would still rather have “interbank markets… as their first port of call, rather than… everyone… just getting money from the Fed.”
Seen in that light, the rise of intraday FX swaps is not just a technical development. It is yet another sign that the price of liquidity is slowly migrating away from administered overnight benchmarks and toward continuously clearing funding markets.
