Citi and CME Clearing have implemented a real-time distributed ledger platform developed by Baton Systems, a payments technology provider. The solution allows a bank to view the collateral in its ledgers in real time, send cash or securities with one click to a clearinghouse, and receive an immediate acknowledgment, regardless of the current technologies they are deploying.
The blockchain-inspired software could materially reduce the cost of back-office operations and speed up margin funding times. Currently, banks have to set aside capital as they wait for collateral to be settled; this platform could potentially free up billions of dollars in capital if trade times can be reduced from days to seconds. Baton Systems is exploring other uses for the API-driven platform, including allowing clients access to distributed ledgers to shorten the cycle for collateral substitutions.