XRP: Ripple competitor Baton Systems could soon take the lead
“3 seconds is a database update and does not move anything. Baton Systems actually settles with no risk. The 3 minutes accounts for the bank ledgers updating and the money actually moving (settling).”
For a long time, Ripple has garnered much attention within the crypto space for its FX settlement capabilities using its blockchain technology and network.
Enthusiasm grew widely because XRP, the first and most popular digital asset to live on the XRP ledger, trades on the crypto exchanges and many investors have exposure to it, skin in the game.
Baton’s Core-FX solution powers FX settlements for major banks
But Ripple, with solutions powered by XRP, is not the only player in the FX settlement town using blockchain technology. Among the firm’s leading competitors is Baton Systems, which was founded as Ubixi in 2016.
The latest news is that Baton Systems’ Core-FX solution powered the world’s first interbank Payment vs Payment (PvP) settlement outside of CLS.
The Core-FX solution was built on Baton’s proprietary distributed ledger technology (DLT) and is governed by the Baton Rulebook. No associated digital asset can be found on the cryptocurrency markets, though.
The solution enables banks to tackle risk in FX settlements generally and in emerging market currencies that sit outside the framework provided by the CLS system.
Baton’s innovative PvP solution empowers market participants to take direct control of their settlement cycles, settle multiple times a day, and streamline workflows, resulting in significant improvements to their liquidity, funding, risk and credit management.
Arjun Jayaram, CEO and Founder of Baton Systems, said: “This development is hugely significant for the entire FX market, as it offers firms the opportunity to really address settlement risk – arguably the most critical control issue impacting post-trade today.
“Today’s announcement demonstrates the tremendous potential this technology presents to FX market participants globally to improve their risk management, intraday liquidity controls and funding profiles. Using proven technology that is readily available today, banks can now take control and completely revolutionise their entire post-trade process from trade-capture through to settlement.”
As part of the implementation both banks have agreed to the Baton Rulebook, a framework designed to provide legal certainty around settlement finality. Baton is engaging with other leading FX trading businesses, as well as regulators globally, to expand market access to fast and riskless PvP settlement protection to a wider universe of participants.
Baton’s 3 min vs Ripple’s 3 sec
The abovementioned FX settlement was between HSBC and Wells Fargo. The major banks intend to start using the Core-FX platform to settle FX trades bilaterally on demand in less than three minutes, on a PvP basis with legal settlement finality.
Ripple has made a name for itself for building a solution that takes only 3 seconds.
FinanceFeeds spoke to Baton CEO and founder Arjun Jayaram, who explained the difference between Ripple’s 3 seconds and Baton’s 3 minutes.
“To clarify, 3 seconds is a database update and does not move anything. Baton Systems actually settles with no risk. The 3 minutes accounts for the bank ledgers updating and the money actually moving (settling). Doing that with finality and not introducing crypto assets is what makes the announcement today an industry trendsetter.”
XRP.org claims a finality time of 3 to 5 seconds, here.
Baton Systems has been able to emerge from the inside and has hired many insiders, including ex-CFTC Chair Giancarlo aka “Crypto Dad”, ex-FIA Chair Jerome Kemp, and Basel III reform Chairman Bill Coen.
The firm has already connected to ICE Clear after having integrated with LCH for automation of collateral workflow and powering JP Morgan’s collateral management.
Besides being developed by institutional players for institutional players, Baton Systems has made its way far from the crypto headlines.
One of the reasons why Ripple looks for media and retail investors’ attention is because the firm funds (or funded, amid the SEC lawsuit) its operation by selling XRP in the market.
Baton has a different way to go about it and is completely focused on working closely with the industry and it’s been extremely successful at that while raising 15 times less funds ($19.1 million vs $293.8 million).
It is possible that the banking industry might prefer using Baton’s blockchain solutions than working with Ripple, a firm at the heart of the cryptocurrency industry, because it could implicitly further legitimize cryptos, stablecoins, and CBDCs, which are seen by bankers as a threat.
