Citi and CME Clearing have implemented a real-time distributed ledger platform developed by Baton Systems, a payments technology provider.
The solution allows a bank to view the collateral in its ledgers in real time, send cash or securities with one click to a clearing house, and receive an immediate acknowledgment, regardless of the current technologies they are deploying.
The blockchain-inspired software could materially reduce the cost of back-office operations and speed up margin funding times. Currently, banks have to set aside capital as they wait for collateral to be settled; this platform could potentially free up billions of dollars in capital if trade times can be reduced from days to seconds.
“This technology allows us to eliminate manual touch points, reduce email traffic, and avoid logging into multiple portals,” said Stephen Marx, Head of Futures, Clearing, and Collateral Operations at Citi. “The capabilities in the funding and collateral space create efficiency and improve productivity for our clients.”
“This innovative real-time payments platform is immediately scalable across any financial institution, exchange or clearing house to deliver sizeable operational and cost efficiencies,” said Arjun Jayaram, CEO of Baton Systems. “Its beauty is its simplicity, leveraging the most useful elements of blockchain, while introducing interoperability and extensibility to easily fit with existing technology 'rails' and business processes.
“We are pleased to support technologies like these, which aim to provide capital efficiencies to customers,” said Sunil Cutinho, President of CME Clearing.
Baton Systems is exploring other uses for the API-driven platform, including allowing clients access to distributed ledgers to shorten the cycle for collateral substitutions.