AFTAs 2022: Best new technology introduced over the last 12 months (trading, risk and compliance)—Baton Systems

Project: Core-FX

    • WatersTechnology Staff
  • LinkedIn  
  • Save this article
  • Print this page  

Overview

In December 2021, Baton Systems’ Core-FX technology supported the world’s first interbank riskless settlement outside of CLS, extending the benefits of payment-vs.-payment (PvP) settlement across currencies and counterparties. Core-FX is designed to enable firms to reduce operational risk with automated, bilateral netting, and eliminate Herstatt risk by settling transactions via PvP. Settlement can take place on demand or multiple times each day, reducing 24-hour FX settlement processes to a matter of minutes.

What problem does it solve?   

On an average trading day, almost $9 trillion worth of FX payments face settlement risk. The problem exists predominantly because access to safe settlement on a PvP basis is available only to a limited number of market participants, while only 18 currencies are supported. There are more than 10,000 firms that would benefit from direct access to a riskless settlement service for the over 120 currencies.

“This development is hugely significant for the entire FX market, enabling firms to really address settlement risk, arguably the most critical control issue impacting post-trade today. It demonstrates the tremendous potential this technology presents to FX market participants globally to improve their risk management, intra-day liquidity controls and funding profiles. Using proven technology that is readily available, banks can now take control and completely transform their entire post-trade process from trade capture to settlement.”
Arjun Jayaram, CEO, Baton Systems

How does it solve the problem?

Using interoperable distributed-ledger technology (DLT), Baton Systems’ Core-FX solution enables FX transactions to be settled using commercial bank money via PvP, including on a T+0 basis, with legal settlement finality. Enabling wholesale participants to benefit from direct access to safer settlements (without the need for central bank accounts) allows more FX market participants to reduce settlement risk.

Future developments

Baton Systems is working toward extending access to on-demand PvP settlement across a broad range of currencies (including emerging market currencies), products and counterparties. In doing so, it provides the FX community with access to automated FX payment netting integrated with PvP settlement.

Why they won

Settlement risk, especially across the global FX markets, is a constant thorn in the side of market participants and regulators. Baton Systems wins the best new technology introduced over the last 12 months (trading, risk and compliance) category in this year’s AFTAs, thanks to its DLT-based Core-FX platform, designed to settle FX transactions using the payment-vs.-payment settlement model and commercial bank money. Not only does the platform broaden the availability of a safe and reliable settlement mechanism to the wider industry; it also significantly reduces settlement times from around 24 hours to a matter of minutes.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe

You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.

Copyright Infopro Digital Limited. All rights reserved.

As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.

If you would like to purchase additional rights please email info@waterstechnology.com

Copyright Infopro Digital Limited. All rights reserved.

You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.

If you would like to purchase additional rights please email info@waterstechnology.com

More on Awards & Rankings

Most read articles loading...

You need to sign in to use this feature. If you don’t have a WatersTechnology account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here