Baton Systems has a DLT-based collateral management system that automates the management of margins for exchange-traded and cleared FX derivatives. Today it announced the addition of the Options Clearing Corporation (OCC) to its roster of central clearing counterparties (CCPs). Other users include JP Morgan and Citi, with links to eleven CCPs, such as ICE Clear Europe, LCH, CME, Eurex and SGX.
OCC is one of eight systemically important financial market utilities in the United States. It’s the world’s largest equity derivatives clearing organization, with equities making up most of its volumes. In contrast, the Baton system focuses on FX derivatives.
However, the latest addition means Baton’s System CCPs are responsible for 93% of margin placed by U.S. registered futures commission merchants (FCMs). Earlier this year, Baton’s CEO Arjun Jayaram told Ledger Insights that more than 40% of the global margins for cleared bank FX derivatives move via Baton’s Core Collateral platform.
“The need to reduce costs associated with funding and liquidity is becoming increasingly important,” said Tucker Dona, Head of Business Development and Client Success at Baton Systems. “For the FCM community, this translates into ensuring money isn’t being left on the table. With an additional CCP they now have the opportunity to automate and optimise an even greater proportion of their collateral under management.”
Baton says it has processed more than $7 trillion in transactions so far. This isn’t only on the collateral management platform but includes other solutions such as Core FX, which HSBC and Wells Fargo are using to settle bilateral foreign exchange transactions.
Meanwhile, this is not the OCC’s first DLT experience. It’s working with another fintech Axoni on a blockchain solution that creates a golden record of securities lending transactions and lifecycle events.