PvP Settlement Orchestration

Powered by OSTTRA and Baton Systems

Mitigate bilateral FX settlement risk, while optimising intraday funding and liquidity, using our on-demand Payment vs Payment (PvP) settlement orchestration service.

Mitigate bilateral FX settlement risk, while optimising intraday funding and liquidity, using our on-demand Payment vs Payment (PvP) settlement orchestration service.

PvP Settlement Orchestration
PvP Settlement Orchestration

FX settlement is in sharp focus for market participants and regulators alike.

A steady increase in FX market volumes and diverse counterparties has led to an increased number of trades exposed to bi-lateral settlement risk, while shrinking timeframes in securities settlement are forcing firms to review processes and timings in FX settlement in order to match funding windows.

Against this backdrop, OSTTRA has partnered with Baton Systems to bring new levels of scalability and flexibility to bilateral FX PvP settlement. The service provides on-demand, intra-day netting and settlement orchestration of FX transactions between counterparties, reducing settlement risk and providing flexible control of intraday liquidity and funding optimisation, including same day settlement. Backed by a comprehensive rulebook and powered by proven DLT technology, the service can be used between wholesale counterparties, across all currency pairs.

OSTTRA PvP Settlement Benefits

Reduce Settlement Risk & Increase Trading Capacity
The solution allows firms to efficiently mitigate Herstatt risk in FX trades. The service leverages a rulebook and a distributed ledger to achieve final settlement through the simultaneous exchange of funds on an intraday basis, increasing trading capacity.

Optimise Intraday Liquidity & Funding
By netting and settling intraday and on demand, the service helps to optimise liquidity and funding, removing the constraints of cut-off windows and the costs of pre-funding nostro accounts, with the full payment and settlement process complete in just 3 minutes.

PvP Across All Currencies & Counterparties
The solution allows firms to manage PvP settlement across all currency pairs and wholesale counterparties, including emerging markets currencies, without the need to access the central bank accounts required by existing multilateral PvP infrastructure.

Reduce Operational Overheads
The service provides automation, control and transparency through the end to end post trade lifecycle, reducing the risk of failures and allowing rapid resolution and resubmission when breaks do occur.

Innovate with minimal disruption
The only live bilateral PvP service in the market, the solution embraces the efficiency and immutability of a distributed ledger, while integrating seamlessly with existing banking systems and payment rails, leading to faster deployment and realisation of benefits.

Scalable and Secure Deployment
Designed for the rigours of institutional capital markets, our highly scalable, single tenant, cloud-based infrastructure has settled trillions of dollars in production and is fully compliant with SOC2-Type 2 standards.

Since 2018, HSBC FX Everywhere has used Baton’s Core FX technology to settle 16 million FX trades across 13 different currencies totalling US$8.1 trillion. Using OSTTRA as a post-trade platform, the wider market will now be able to use the same technology to reduce their FX settlement risk through PvP settlement and compression, as well as optimising their cash flows. Overall, this will significantly mitigate Herstatt risk in the market.”

Mark Williamson, Global Head of FX & Commodities Partnerships & Propositions at HSBC

How it works

Related Service

Trade Processing

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