Funds Transfer Pricing (FTP)
The internal rate that moves interest-rate risk off the business lines and into Treasury.
Applied to today
Applied to today
- The belly-to-long end richened over the past week (5Y −5 bps, 10Y −9 bps, 30Y −10 bps) while the front rose (1M +7 bps, 6M +4 bps), so matched-maturity FTP credits on term deposits and charges on 5–10Y fixed loans should be refreshed downward even as short-tenor funding credits tick up.
- Over the past month the curve bear-steepened meaningfully (2Y +22, 3Y +26, 5Y +23 bps) — stale FTP curves would be under-charging new fixed-rate loan production and overstating lending-unit spread, leaving Treasury short the rate risk it's supposed to own.
- SOFR jumped +13 bps week-over-week against an unchanged EFFR and target, a signal worth reflecting in the short-end liquidity premium of the FTP curve since wholesale funding proxies are repricing faster than policy.
Funds Transfer Pricing is the internal mechanism that charges asset-generating units for the funds they use and credits deposit-gathering units for the funds they provide. It is how an institution separates credit spread, liquidity, and interest-rate risk so each can be managed where it belongs.
The core idea
Every loan and deposit is assigned a transfer rate based on a matched-maturity point on an FTP curve (typically built off the swap or treasury curve plus liquidity adjustments).
- A 5-year fixed loan is funded at the 5-year FTP rate → the lending unit earns the loan rate minus the transfer rate (its credit spread), and the interest-rate risk passes to Treasury.
- A non-maturity deposit is credited a blended rate reflecting its assumed behavioral life.
Why it matters
Without FTP, business-line profitability is contaminated by rate bets nobody chose to take. With it, Treasury owns the curve risk centrally and can hedge it, while lines are measured on the spread they actually control.
How PhxIQ relates
The treasury curve and swap-adjacent rates on the dashboard are the raw material for an FTP curve. When the curve shifts, FTP curves should be refreshed — the briefing flags this when the move is material.