The world’s first interbank Payment vs Payment (PvP) settlement outside of CLS has been completed by HSBC and Wells Fargo using Baton Systems’ Core-FX solution, built on Baton’s distributed ledger technology (DLT). Baton’s PvP solution gives market participants direct control of their settlement cycles and streamline workflows for improvements to their liquidity, funding, risk and credit management — all on a PvP basis — reducing settlement risks and FX processing costs. As part of the implementation, HSBC and Wells Fargo agreed to the Baton Rulebook, a framework designed to provide legal certainty around settlement finality. The transaction marks the inception of a profound change in FX settlements, says Baton Systems, as all market participants now have the opportunity to radically reduce their settlement exposure and associated risks outside of the CLS framework. The transaction means all currencies, including emerging market currencies, which are ineligible for PvP settlement in CLS, can now be securely settled using DLT. 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. Arjun Jayaram, CEO and founder of Baton Systems, comments: “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. He adds: “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.”
