The vanguard of FX Settlements transformation

Jerome Kemp, senior advisor to Baton, explains his passion for the markets in which Baton is disrupting: “I’ve always been fascinated,” he says, “by the idea that you can trade in micro, if not nano, seconds, but in some cases it takes one week or more to settle a trade.”

There is, says Jerome, this basic disequilibrium which needs addressing, and Baton’s distributed ledger technology is directed at doing just that. Jerome explains how this area ripe for transformation has become all the more important in the light of last year’s unprecedented market volatility. FX in particular has found itself in the spotlight due to the massive amount of settlement risk that has always been seen as an inevitable.

“Baton is the vanguard of what is happening in FX settlements.”
– Jerome Kemp

Jerome notes that FX markets have in the past taken steps to minimise settlement risk exposure. The introduction by CLS of PvP several years back had a positive impact, but recently the markets have seen an inversion of the amount of trade volume benefitting from PvP. With the uptick in trading across major emerging currencies such as CNY, IDR or RUB, the actual amount of PvP protection through CLS is declining, and close to USD9trillion of payments are at risk on any given day – according to the 2019 BIS Triennial survey. 

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