DLT-based platform to help redeploy cash and collateral balances more effectively to global clearing houses
Baton Systems (“Baton”), a provider of distributed ledger-based post-trade solutions for capital markets, and J.P. Morgan have developed a solution that enables the near real-time orchestration of cash and collateral transfers to multiple clearing houses. The new service addresses the challenge of having to tie-up excess funds across the clearing workflow by integrating settlement instructions for custodians and other funding sources into existing optimization and treasury systems without any need to dismantle technology infrastructures.
By integrating with J.P. Morgan’s internal proprietary system to automate and synchronize existing business processes, the solution eliminates the need to coordinate multiple systems, reports, and spreadsheets. The resulting end-to-end automation of the margining and collateral workflows provides full visibility of the asset flows between J.P. Morgan and clearing houses, with complete audit trails and real-time notifications. It therefore reduces the need to pre-fund margin payments under the current market infrastructure related to margin settlements.
“The technology we have developed reduces the time needed to process the entire collateral workflow from hours to near real-time,” said Anthony Fraser, Head of Global Clearing Operations and Trading Cost Management at J.P. Morgan. “We’re already seeing faster, more efficient payments, reconciliation and reporting for all parties in the collateral lifecycle.”
“Our collaboration with J.P. Morgan is accelerating the movement of assets,” said Arjun Jayaram, CEO & Founder at Baton Systems. “This is a truly ground-breaking solution that removes the need for manual intervention in the collateral process by integrating with financial institutions’ collateral and cash systems, leaving their existing processes and systems in place.”
The new solution also synchronizes and accelerates the collateral substitution process associated with two legs of that process; e.g., cash vs. collateral, currency vs. currency, or collateral vs. collateral.
The technology is being scaled across global clearing houses and enhanced with new functionality with the potential to facilitate more complex clearing arrangements. The solution is now available for deployment across all major derivatives firms.