JP Morgan Deploys Baton Systems for Collateral
Posted by Colin Lambert. Last updated: December 19, 2023
JP Morgan’s collateral services unit has collaborated with Baton Systems, by deploying the latter’s Core-Collateral solution to enable tri-party clients to automate the optimisation of collateral to meet margin calls at a range of CCPs.
The partnership went live with the first, un-named, CCP in November, and will further roll out across Baton’s CCP network which currently includes 13 CCPs, together comprising more than 94% of cleared margin posted by US registered FCMs.
The firms point to the higher interest rate environment and the challenge it presents for derivative market participants, selecting the optimal composition to meet margin obligations. Baton observes that siloed data and manual collateral management processes often mean that understanding what collateral is available, selecting and then mobilising the most advantageous assets can be an complicated, time-consuming and laborious task.
With the new collaboration, tri-party clients can now aggregate all available collateral across their various sources into a single “longbox”, automatically select the most cost-effective securities and rapidly mobilise all assets. In doing so, they are improving the efficiency of the collateral management process, allowing more effective funding decisions to be made and reducing operational risk.
“Through this partnership we are able to extend the economic value our Core-Collateral offering can bring to additional market participants which is proving increasingly important given the current environment,” says Arjun Jayaram founder and CEO of Baton Systems.