OSTTRA’s FX PvP settlement orchestration service grows as Fnality collaborates with Baton’s distributed ledger technology (DLT) and becomes the first digital settlement system to be added to the network. 

OSTTRA and Baton Systems announced a strategic collaboration with Fnality following the successful completion of a proof-of-concept integrating Fnality’s system with their on-demand FX payment-versus-payment (PvP) settlement orchestration service. In addition to the current ledger-supported intraday and on-demand netting and settlement, Fnality expands available settlement options using an asset with the credit characteristics of central bank money, that is recorded on a DLT ledger, to settle around the clock. This will allow institutions to efficiently manage both liquidity and settlement risk. 

Over the past year, OSTTRA and Baton have been actively engaging with a group of leading market participants, including 12 major banks, to guide development plans and ensure the service enables more FX market participants to benefit from the assurance and liquidity management benefits of on-demand, atomic PvP settlement-functionality which can prove critical in volatile times.  

This initiative directly responds to market demand to expand PvP settlement orchestration to additional settlement venues. As part of the proof-of-concept, participants used an asset with the credit characteristics of central bank money, recorded on a DLT ledger, to offer PvP settlement services alongside commercial bank money. This expands settlement options, offers flexibility in selecting Fnality for one or both of the settlement legs and enables around-the-clock settlement orchestration beyond traditional market hours, enabling participants to enhance overall liquidity efficiency. This update is part of a series of enhancements that will see the service mature over the coming months to offer increased flexibility and further options for how and where settlements occur. 

Participants also benefit from continuous, automated payment netting and splitting, seamlessly integrated with on-demand, instantaneous PvP settlement orchestration, delivered to each participant’s selected settlement venue(s). This allows firms to better manage the overall funding burden and liquidity pressures associated with large volumes and large-value settlements, creating additional settlement capacity to support business growth.  

Michelle Neal, CEO of Fnality said, “Joining the OSTTRA and Baton PvP network marks a significant milestone in our mission to make institutional-grade digital settlement a practical reality. This integration is the first step in bringing true PvP capabilities to our customers, enabling them to settle FX transactions using a digital record of funds held at the central bank, and introducing greater choice and flexibility into the settlement landscape. Through Fnality, this collaboration lays important groundwork for more resilient and efficient FX markets by reducing risk, enhancing liquidity, and supporting atomic, instantaneous settlement at any time of day.”

“At OSTTRA, we are committed to continually evolving post-trade efficiency for our clients,” states John Stewart, co-CEO. “Fnality’s introduction of  DLT settlements using an asset with the credit characteristics of central bank money, coupled with extended hours, represents a key milestone in this journey. This strategic enhancement gives users more robust tools to manage risk and optimise their settlement orchestration processes in today’s dynamic global markets.”

Arjun Jayaram, Founder and CEO of Baton Systems, commented: “We’re delighted to partner with Fnality to expand the range of settlement options within the PvP service to address bank liquidity optimisation and risk management requirements. With these enhancements, settlement participants can select the type of asset or system they wish to settle in and settle on a 24×7 basis whilst benefiting from proven capabilities to net and settle large volumes of transactions on a near real-time basis. Ultimately, our goal is to continue innovating and collaborating so we can support firms in settling transactions where they choose, over both digital and traditional payment rails.”

Source: Fnality