Cash market and Cash pool: Difference between pages

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imported>Doug Williamson
(Classify page.)
 
imported>Doug Williamson
(Linked to The Treasurers Handbook - Legal implications of cash pooling structures)
 
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In the cash market, delivery and settlement of the deal is immediate or within a few days, as compared with the future and options markets where delivery and settlement are delayed.
A cash pool is a structure involving several related bank accounts whose balances have been aggregated for the purposes of optimising interest paid or received and improving liquidity management. A cash pool can be physical or notional.  


The cash market is also known as the ''spot market''.
A physical cash pool is a concentration account used for the purposes of managing liquidity. Surplus funds are physically concentrated into the account in order to maximise interest. Deficit accounts are covered by transfers from the cash pool in order to minimise overdraft interest.
 
A notional cash pool is a structure involving several related accounts whose balances have been aggregated for the purposes of optimising interest paid or received.  In other words a bank looks only at the total balance of the accounts in the notional pool when calculating interest, but there is no physical movement of funds.




== See also ==
== See also ==
* [[Cash]]
* [[Aggregation]]
* [[Market]]
* [[CertICM]]
* [[Spot]]
* [[Concentration account]]
* [[Consolidation]]
* [[Liquidity]]
* [[Master account]]
* [[Notional pooling]]
* [[Legal implications of cash pooling structures]]
 
 
==Other links==
[http://www.treasurers.org/node/9923 The pros of pooling, Sarah Boyce, The Treasurer, March 2014]


[[Category:Financial_products_and_markets]]
[http://www.treasurers.org/node/8824 Take the plunge, The Treasurer, March 2013]

Revision as of 11:04, 1 December 2014

A cash pool is a structure involving several related bank accounts whose balances have been aggregated for the purposes of optimising interest paid or received and improving liquidity management. A cash pool can be physical or notional.

A physical cash pool is a concentration account used for the purposes of managing liquidity. Surplus funds are physically concentrated into the account in order to maximise interest. Deficit accounts are covered by transfers from the cash pool in order to minimise overdraft interest.

A notional cash pool is a structure involving several related accounts whose balances have been aggregated for the purposes of optimising interest paid or received. In other words a bank looks only at the total balance of the accounts in the notional pool when calculating interest, but there is no physical movement of funds.


See also


Other links

The pros of pooling, Sarah Boyce, The Treasurer, March 2014

Take the plunge, The Treasurer, March 2013