# **Liquidity Forecasting and Actively Managing Payment Outflows** #### **Forecast intraday liquidity. Actively control settlement. Reduce funding costs and intraday liquidity risk.** ## **From Liquidity Insight to Controlled Settlement** **Intraday liquidity outcomes are increasingly determined by how effectively settlement behaviour is controlled throughout the day.** Baton’s liquidity forecasting and dynamic payment outflow controls use live data and continuously updated liquidity projections to drive settlement decisions. By combining expected inflow and outflow timings, projected liquidity positions and real-time settlement progress, institutions can: - Stabilise settlement flows as conditions evolve - Minimise peak liquidity usage - Lower funding costs - Improve capital efficiency **Modular Deployment. Incremental Adoption. Extendable by Design** ##### **An Integrated Framework for Real-time Liquidity Control** Baton connects intraday liquidity insight directly to settlement execution. Institutions can deploy individual capabilities such as **real-time monitoring, payment matching, multi-horizon liquidity forecasting and active outflow management** independently, then extend coverage as needs evolve. **Liquidity forecasting and outflow management modules work together to govern the conditional release of payment instructions.** Decisions are based on reconciled inflows, projected liquidity positions, payment priorities and real-time constraints – optimising liquidity through prioritisation, sequencing and throttling across currencies and entities. With Baton, real-time liquidity decisions are continuously informed, and driven, by live execution and reconciled data: - **Start-of-day forecasts** are calculated by combining anticipated exposures, outstanding and counterparty, and currency-specific, historic payment behaviours - Real-time payment matching and settlement progress continuously **update liquidity projections** anticipating emerging funding pressures and dynamically adjusting how payment outflows are managed - **Sequencing and throttling decisions feed back into forecasts, refining expected positions as payments are released or deferred** - **Alerts and anomaly detection** surface deviations from expected behaviour, allowing for the recalibration of intraday projections, sequencing and throttling decisions Each settlement event informs the next decision, enabling liquidity to be actively managed throughout the day and stabilised under stress. ## **Capital and Regulatory Impact** Precision liquidity forecasting and active outflow management directly **shape capital efficiency, funding requirements and resilience**. By stabilising settlement behaviour and reducing peak liquidity pressure, institutions can: #### _Lower intraday_ **and** _contingent funding requirements_ #### _Reduce excess liquidity buffers_ **without increasing risk** #### _Improve return on equity (ROE)_ **through more efficient capital deployment** #### _Strengthen P&L resilience_ **during periods of market stress** #### **Demonstrate robust** _intraday liquidity risk management_ ## **Actionable Foresight for Intraday Liquidity Control** Baton’s liquidity forecasts provide treasury teams with an accurate, granular view of **expected net outflows, peak liquidity usage and emerging funding pressure points across intraday, end-of-day and next-day horizons**. Liquidity forecasts are recalibrated intraday as conditions change, ensuring funding and settlement decisions are based on current expected liquidity outcomes. **The Result: Earlier visibility of funding pressures – enabling reduced peak net outflows, lower external borrowing and more efficient liquidity use.** Baton’s forecasts are driven by a rich, reconciled data set that reflect how liquidity actually behaves during the day, including: - **Historical counterparty settlement behaviour:** Predicts likely inbound payment timings based on observed patterns and probabilities. - **Scheduled obligations and priorities:** Includes mandatory Time-Specific Obligations (TSOs) and other priority payments with known timing constraints. - **Live balances and in-flight activities:** Current balances, reconciled cashflows and payments currently being executed. - **Real-time variance tracking:** Tracks divergence between expected and actual flows and timings, feeding back into forecast accuracy as the day unfolds. This combination ensures forecasts remain **both forward-looking and grounded in real-time settlement data**. ## **Controlled Payment Release Driven by Accurate Forecasts and Real-time Data** Baton enables real-time, controlled management of payment outflows that aligns settlement activity with actual and expected liquidity conditions throughout the day. Intraday liquidity forecasts, combined with real-time balances, settlement updates and configurable rules are used to determine when and how payment instructions are prioritised, sequenced or throttled. **The Result: Controlled, predictable settlement that reduces peak liquidity usage, lowers reliance on intraday credit and strengthens resilience.** Payment initiation is continuously informed by a consolidated, real-time view of: - **Expected liquidity positions and timings** from intraday forecasts - **Confirmed inflows and real-time settlement status** - **Payment priorities and obligations** incorporating Time-Specific Obligations (TSOs), priority payments, cut-offs and throughput requirements This approach enables treasury and operations teams to: - **Dynamically optimise payment sequencing** as liquidity conditions evolve - **Prioritise TSOs** while deferring less urgent flows - **Throttle or hold lower-priority payments** when balances fall below defined thresholds - **Release payments conditionally** as forecasted or confirmed inflows materialise - **Manage payment release within credit line constraints**, supporting reduced intraday borrowing and funding costs ## **How Baton supports ECB Sound Practices for Managing Outflows** The ECB Sound Practices for Managing Intraday Liquidity Risk expect institutions to actively manage payment outflows so TSOs settle on time, while other payments are prioritised within available liquidity under BAU and stressed conditions. Baton provides real-time intraday payment outflow management, enabling institutions to: - **Establish an outflow ladder**, prioritising TSOs and other critical payments - **Define BAU liquidity buffers and escalation alerts** for treasury and risk teams - **Release payments using rule-based controls** in combination with forecasts and live settlement status - **Dynamically prioritise, sequence or throttle payments** based on pre-defined conditions - **Protect priority payments under stress**, reserving liquidity capacity for TSOs and other priority payments - **Actively manage payment outflows across currencies** with full transparency and auditability This enables predictable, controlled payment flows, supporting ECB expectations, improving liquidity efficiency and resilience.