Baton Systems announced that it has directly connected The Depository Trust & Clearing Corporation’s (DTCC’s) Fixed Income Clearing Corporation (FICC) and National Securities Clearing Corporation (NSCC) to its Core-Collateral® network.

Baton’s integration with FICC

Baton — which provides connectivity and empowering networks in post-trade, settlement and collateral management — is now providing clients with direct connectivity to DTCC’s FICC as firms prepare for the Securities and Exchange Commission (SEC) U.S. Treasury clearing mandate which is set to take effect on December 31st, 2026, for cash transactions and June 30th, 2027, for repo transactions.

This change in market structure means firms must consider establishing new connections or expand existing connections with clearing houses, necessitating considerable operational changes and system upgrades. In response to client demand and the anticipated surge in clearing volumes expected to be directed to FICC, Baton worked collaboratively with DTCC to provide the direct connectivity to link FICC to its Core-Collateral network. This new integration positions Baton to seamlessly support clients through this critical transition, reducing operational friction, supporting collateral optimisation and liquidity management, in addition to solving for the requirements of an evolving regulatory landscape.

With this new connectivity, Baton’s collateral management clients can streamline collateral management processes for US Treasuries that they choose to clear with FICC. Clients will be able to access real-time balance information and eligibility schedules necessary to effectively optimise resource allocation and then efficiently instruct asset and collateral movements to and from FICC.

Both Baton’s Core-Collateral clients, as well as firms that have chosen to collaborate with Baton to enable tri-party clients to benefit from Baton’s extensive direct two-way CCP connectivity, will be able to gain improved access, increased control, and efficiency in managing their US Treasury collateral operations. Core-Collateral’s clients include several of the world’s largest Futures Commission Merchants (FCMs), demonstrating the solution’s value in driving operational improvements to a key market segment. The first client to manage their collateral at FICC using the Core-Collateral network is now live, and movements are actively being instructed via the platform.

Brian Steele, President of Clearing and Securities Services, DTCC said: “With firms actively preparing for US Treasury clearing, we view the FICC link to the Baton network of clearing participants as an important enabler of collateral efficiencies. This effort also demonstrates DTCC’s ongoing commitment to delivering innovative and collaborative offerings that deliver value and enable all firms to be ready for the mandate.”                                                                                                                                     

Baton’s integration with NSCC

In addition to Baton’s new FICC connectivity, the firm has also directly connected to NSCC, DTCC’s clearing subsidiary that clears and settles virtually all broker-to-broker equity, corporate and municipal bond and unit investment trust (UTI) transactions in the U.S. markets. This connectivity further extends the ability of Baton’s clients to streamline their collateral management processes across DTCC’s central clearing offerings and benefit from enhanced liquidity visibility, access and control.

Arjun Jayaram, Founder and CEO, Baton Systems added: “Our connection with FICC means much of the heavy lifting our clients would otherwise need to do to connect with the clearing house is already done. With the integration of FICC into Baton’s Core-Collateral ecosystem, we are well placed to help firms prepare for the go-live of US Treasury Clearing. At the same time, our connectivity to NSCC enables us to further streamline collateral management processes and improve liquidity for clients.”

Source: Baton