FTP is an accounting framework to determine the price or rate at which funds would transfer between liabilities, central funding & assets units. It takes into accounts all the relevant factors such as base cost of funding, margin/incentives for liabilities unit for generating funds,liquidity and interest rate risk management charge etc. FTP enables better product pricing, profitability and performance measurement at banks.
The issues that are typically encountered during FTP framework development include:
- FTP Governance framework and use in decision making
- Selection of appropriate methodology: Matched Maturity vs. Pooled Funding Model
- Define appropriate Rate Curves: Benchmarks and spread
- Selection of rates for non-maturing products
- Allocation of liquidity buffers costs
- Determination of Equity transfer price
We provide advisory services for FTP framework development /review, system requirement specifications, system vendor selection and implementation support.