Liquidity - an introduction
The primary function of prudential liquidity is the provision of sufficient assets in realisable form so as to enable the Society to meet its financial commitments as they arise and the absorption of potential cash flow requirements created by maturity mis-matches.
The management of the Society’s liquidity portfolio and strategy’s the responsibility of the Treasury team.
The investment team is also responsible for the use of derivatives to control financial risks resulting from the Society’s business activities. Section 9a of the Building Society Act 1986 restricts the usage of derivative instruments by Building Society’s to the reduction of risk.
In determining the Liquidity strategy, consideration is given to the objectives for the quantity, quality, availability and cost of liquidity.
