Baton connects to ICE in “real shift in the collateral management landscape”

Rick Steves

“What we are now seeing is a real shift in the collateral management landscape”, said ex-CFTC Chairman J. Christopher Giancarlo.

Baton Systems has completed connecting to Intercontinental Exchange, making ICE Clear Europe the 5th major global CCP available on the Baton network, together comprising more than 73% of margin, placed by U.S. registered FCMs.

While ICE Clear Europe is the first member of the ICE Group to go-live on the Baton platform, the roll-out plan should see ICE Clear U.S. and ICE Clear Credit connected in the coming months.

Baton helps FCMs automate and optimise collateral holdings and expedite the movement of cash and securities with leading CCPs responsible for managing 43% of the funds held by global CCPs. Citi recently became the first FCM to connect to ICE Clear Europe and benefit from the extended CCP network.

The Baton network connects the world’s largest exchange operators, FCMs, custodians, and banks, who enjoy automated collateral management.

Market participants can access CCP account balances and acceptable collateral lists on-demand and view all assets deposited at external custody banks and CCPs. FCMs can also be automatically alerted to changes and instruct multiple cash and securities movements via the Baton interface.

“With Baton we have been able to accelerate our innovation agenda and drive efficiencies throughout our entire clearing process. Our Collateral Management team can now access information in real-time and dynamically manage our inventory of eligible collateral across the network of CCPs we interact with the most, which enables us to better serve our clients”, said Mariam Rafi, Managing Director, Americas head of Clearing and FXPB and Global head of Financial Resource Management, Futures, Clearing and FXPB, at Citi.

J. Christopher Giancarlo, Senior Advisor to Baton and former CFTC Chairman, said: “What we are now seeing is a real shift in the collateral management landscape.

“The world’s largest FCMs are connecting directly with the world’s largest CCPs – this means that for the first time in history it will be possible for a significant proportion of the total collateral held with CCPs globally to be automatically optimised.” adding “As the network expands the benefits derived by all participants are only likely to increase. This presents huge potential for the industry as a whole to eliminate unnecessary risks.”

Crypto’s revolving door: Ex-CFTC Chairman Giancarlo joins Baton Systems

Chris Edmonds, Global Head of Clearing and Risk at ICE, commented: “We are always focused on how we can help our customers bring efficiencies to their processes. With Baton completing a connection to the ICE Collateral API, our clearing members can further optimize their collateral and margin management processes. We are now facilitating additional ICE CCPs with Baton, so we can assist more of our clearing members globally across the numerous asset classes we clear.”

Tucker Dona, Head of Business Development and Client Success at Baton Systems, stated: “The market coverage that’s now possible via the Baton network is remarkable – as is the speed that we can bring new participants on board. We can now get new clearing firms live on the platform, with full access to our extended CCP network, in a matter of weeks.”

In May, Baton integrated LCH to automate the end-to-end collateral workflow for participants in the derivatives markets. JP Morgan is expected to be one of the first clients to be managed within this workflow.

Baton uses a distributed ledger system to synchronise and deliver on-demand asset management and asset moves. This is a leap forward in the old school management of collateral through FX platforms as it removes the need for managing margin requirements on both sides which usually leads to a situation when one end of the deal is mired in issues.

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