Baton Systems integrates with LCH for automation of collateral workflow

Karthik Subramanian

Baton Systems, a provider of post-trade solutions for financial markets, has announced its integration with LCH, a leading clearing house, for automating the end-to-end collateral workflow for participants in the derivatives markets.

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This will enable Baton’s clients to hold manage their collateral at LCH using the Baton platform. 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.

“Baton’s integration with LCH is a significant milestone in our aim to have a comprehensive global coverage of CCPs on the platform,” said Anthony Fraser, Head of Global Clearing Operations and Cost & Commission Services at J.P. Morgan. “This will bring further efficiency in our collateral management process and will provide greater real-time visibility of our margin and collateral holdings.”

By harmonising and synchronising data, the Baton platform is able to show the users full transparent information of the margins that are needed for their transfer and it also shows the flow of assets at external banks and counterparties. This gives a lot of confidence for the users and a sense of calmness as they are able to see the exact situation in the asset movement cycle.

“The growing network of market participants on Baton’s platform is a testament to our vision of revolutionising payments and settlements in capital markets,” said Tucker Dona, Head of Business Development and Client Success at Baton Systems. “With additional CCP connectivity, we are streamlining the collateral workflow process for market participants and enabling greater efficiency while also reducing costs typically associated with legacy systems.”

More and more financial services companies are realising the importance of using distributed ledger as a means of improving the security and transparency of their systems. It is also seen that major investors and companies have also joined the chorus in demanding transparency of operations and asset flow which such platforms provide. This seems to be the latest technology push in the financial sector which has been long criticised for its slowness and lack of transparency.

It is expected that this change in the way asset moves and transfers are done would be inevitable for all financial institutions in the long run and that is why we are now seeing them choosing to tie up with platforms like Baton which connect with their systems to ensure the transparency is given to the end-user but with strong security practices as well.

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