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Liquidity on tap !

An advertisement by a mutual fund company stated "investments are for when you need them".

Settlement cycles are reducing on stock exchanges across the globe.

Money movements for trade settlements still take time (hours, if not day/s).

Liquidity is still a buzzword in the markets.

So how does one define the when - and who or what defines the when?

The need is defined by the person who invests. Only that person tell when the money is needed. 

Technology makes it faster than ever before for him to convert his stock or commodity investments into cash.

But…does one really get the cash from one's investments when one needs it the most? 

How many STOPs are on the route when one sells his investments to convert them into cash? How many entities in the market handle this trade? How many "systems" does the trade flow through till it results into cash for the investor? 

Everything (well, almost evetyhing) happens in the market "post-facto" i.e. after the need arises.

Consider this now :

•                I go to an ATM (somone calls them Any Time Money) and withdraw cash against the value of my stocks held in my stocks account (not from my savings or overdraft account).

•                I log onto my bank website and transfer money online for any need, against the value of my stocks held in my stocks account (not from my savings or overdraft account).


Can the financial services industry process some steps before the need arises? 

e.g. pre-approved, marked-to-market value of stocks for a "loan" or for an outright "sell" to a "market maker"? One will know how much cash can one withdraw or transfer against the value of one's stocks.

If the decision to withdraw cash is taken, money and stocks must move at the same time when the investor decides to do so. 

One would (should) be happy to pay some fees to convert investments into cash instantly; in any case one pays interest for overdraft or loans.

It will be beneficial to both, the investor as well as the institutions who can make this possible. 


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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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