Derivative Path and Baton Partner for FX Solution

Derivative Path and Baton Systems have unveiled a partnership to deliver a fully integrated FX payments and nostro management solution for regional and mid-market financial institutions.

The firms observe that many regional and mid-market banks are looking to expand and strengthen their FX and multi-currency capabilities beyond the constraints of traditional correspondent banking models, which typically rely on a single provider for pricing, liquidity access, and payment execution. They add that while this approach remains a practical way to deliver these services, it can limit flexibility and control over pricing, liquidity sourcing, and payments and balance management, thus impacting their ability to compete as FX volumes increase and client expectations evolve.

As a result, the further say that some firms are now looking to directly manage access to pricing and their own nostro accounts for a core set of currencies, while continuing to rely on liquidity providers for broader coverage – something the partnership is designed to support.

The firms say the solution which combines Derivative Path’s connectivity to multiple liquidity providers with Baton’s real-time operational control, brings liquidity access and end-to-end visibility together in a single framework. This provides the infrastructure required to support direct nostro management, real-time monitoring of balances and exposures, and coordinate FX operations across currencies and counterparties.

It also enables banks to operate a hybrid operating model, maintaining existing correspondent relationships for non-nostro currency activity, while accessing multiple liquidity providers and gaining front-to-back operational and liquidity control over the currencies and accounts they choose to manage directly. This expands pricing options, reduces reliance on a single provider, and creates a more flexible and controlled operating model, they state, allowing institutions to scale their FX and multi-currency activities without building and operating independent infrastructure.

Control is enabled across the full FX lifecycle, from execution through to settlement and reconciliation. Banks can offer commercial clients multi-currency accounts while ensuring real-time visibility over nostro balances and intraday positions, greater flexibility in how FX is priced and delivered, and automated payment control. “This allows institutions to manage liquidity with greater precision, improved responsiveness to clients, and capture more value from their FX business,” the firms state, adding that for institutions that have outgrown single-dealer arrangements for their core currencies, it provides the infrastructure to scale systematically while preserving the correspondent and liquidity provider relationships that remain central to serving the full breadth of client needs.

Built on a cloud-native, API-first architecture, the platform also incorporates Swift connectivity, enabling banks to exchange payment instructions using their own BIC and track them in real-time through Swift gpi. This provides greater visibility into payment status and control over execution, without requiring banks to build and maintain their own Swift integration or upgrade existing wire platforms – reducing implementation time, cost, and complexity. 

“Regional banks with established FX programmes know what the next level looks like, but most technology solutions either underserve them or require an enterprise build that takes years,” says Zack Nagelberg, co-founder and president of Derivative Path. “What we have built with Baton gives these institutions the operational control they need to grow their FX business on their terms. Banks that understand nostro management, spread control, and the complexity of handling incoming FX flows at scale will recognise immediately what this combination makes possible.”

Arjun Jayaram, founder and CEO of Baton Systems, adds, “For years, the infrastructure required to manage FX settlement and nostro operations at scale has been refined within the largest global institutions. By partnering with Derivative Path we’re making that same level of control, visibility, and operational rigour accessible to regional banks in a way that is practical to implement – enabling these institutions to take direct control of their FX business, service their core customers and compete more effectively, without the cost, complexity, and timelines, associated with building out those capabilities themselves.”