Citi and CME Clearing have implemented a collateral management distributed ledger technology (DLT) developed by Baton Systems, a payments technology provider.
The platform allows a bank to view the collateral in its ledgers in real time and send cash or securities to a clearing house instantly.
The blockchain-inspired software aims to reduce the cost of back-office operations and speed up margin funding times.
According to Baton Systems, the solution promises to free up billions of dollars in capital if the trade deal requires it.
As it stands, banks have to set aside capital as they wait for collateral to be settled.
Arjun Jayaram, CEO of Baton Systems, said: “This innovative real-time payments platform is immediately scalable across any financial institution, exchange or clearing house to deliver sizeable operational and cost efficiencies.”
Stephen Marx, head of futures, clearing, and collateral operations at Citi, said: “This technology allows us to eliminate manual touch points, reduce email traffic, and avoid logging into multiple portals.”
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