JP Morgan has teamed up with distributed ledger technology specialist Baton Systems to develop a DLT-based platform that helps automate derivatives margin payments.
The service enables near real-time orchestration of cash and collateral transfers to multiple clearing houses, say the partners.
In doing so, it promises to address 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 optimisation and treasury systems without any need to dismantle technology infrastructures.
The platform integrates JP Morgan's internal proprietary system, automating and synchronizing existing business processes, which gets rid of 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 JP Morgan and clearing houses, with complete audit trails and real-time notifications. This means it reduces the need to pre-fund margin payments under the current market infrastructure related to margin settlements, claim the firms.
The technology is already being scaled across global clearing houses and is now available for deployment across major derivatives firms.
“The technology we have developed reduces the time needed to process the entire collateral workflow from hours to near real-time,” says Anthony Fraser, head, global clearing operations, and trading cost management, JP Morgan. “We’re already seeing faster, more efficient payments, reconciliation and reporting for all parties in the collateral lifecycle.”