The evolution taking place in fixed income markets has laid the foundation for the recent growth in credit index futures, positioning 2025 as a pivotal year for further proliferation of the product and broad adoption by the market. Advancements we’ve seen in market infrastructure, such as the electronification of trading, real-time bond and ‘liquid’ index pricing, as well as enhanced analytics on Terminal to compute fair value and identify relative value opportunities, have transformed how buy-side firms are managing and trading credit risk. These trends will continue, enabling greater price transparency and standardisation of this market which, historically, aids in the development of exchange traded products like credit index futures. 

The existing contracts provide broad-based exposure to the European, US and emerging market corporate bond markets utilising Bloomberg’s fixed income benchmarks. In 2025, we envision an expansion of this global credit futures complex, allowing investors to target regional credit markets and specific risks such as duration, sectors, or credit quality, providing a more diverse range of tools for those seeking local exposure and precision. This will lead to increased cross-margining opportunities with correlated products, amplifying the utility and cost-effectiveness of the product. 

For global credit, we enter a year of uncertainty in 2025, with resilient corporate fundamentals and potential easing of monetary policy offset by ongoing geopolitical tensions. Investors will continue to find value in a flexible credit vehicle that can be used to deploy capital quickly, express a tactical view or hedge corporate credit exposures. The product will continue to attract a diverse range of market participants, from asset managers to insurers, looking for narrow bid-ask spreads and tight tracking to the benchmark. We expect further normalisation of credit index futures as a core instrument in credit markets.

Charlie Campbell-Johnston, head of automation, international, Tradeweb 

The last few years have thrown fixed income traders one curveball after the other, and automation has proven itself as an effective tool to deliver scalability and time efficiency across different products and through a range of trading protocols. On the other hand, systematic and cross-asset funds have used automation to create new trading activity and realise new strategies. 

The game, however, could change in 2025. A combination of technological innovation and high-quality data would enable traders to adapt their automation parameters to actual real-time market scenarios, giving them even more control over the trade execution process. After all, automation has already transcended its operational efficiency origins and this evolution would cement its hard-earned place at the core of a dynamic and innovative execution desk. 

Tucker Dona, head of business development, Baton Systems 

We are one-year away from the mandatory central clearing of US Treasuries, which is going to have a material impact on the way that firms post margin for this product. Firms wanting to offset the impact of higher margins need to spend 2025 making operational changes and upgrades to optimise their systems for trading and clearing US Treasuries. However, there is still more clarity needed on which CCPs market participants will choose to clear these products, and which model participants will use, such as sponsored or done-away. Thankfully, much of the operational preparation and workload can be done efficiently with support from vendors providing direct connectivity into the CCPs.

If firms are not able to efficiently optimise and mobilise available assets across the range of CCPs they will use for clearing US Treasuries, they are going to face operational and cost challenges. By using data-driven insights to select the most eligible and opportunistic collateral for the different clearing venues and then being able to execute all movement instructions, firms can manage the higher margin levels more effectively. They will also be able to reduce associated costs, and more efficiently manage better their collateral usage and its impact on available liquidity. 

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As payments become more critical for large banks, we are noticing changes in settlement volumes, liquidity pressures, and operational challenges linked to market volatility. Typically, higher trade volumes increase risk due to volatility and intraday liquidity pressures related to margining and settlements. Additionally, the rise in trades exacerbates operational issues, such as mismatches, breaks, and strain on affirmation processes when handled manually.

There are both positive and negative aspects to consider. Increased volumes create revenue opportunities for firms with the technical capabilities to manage risk, intraday liquidity, and the additional operational demands. Real-time visibility and control are crucial in this context, exposing the limitations of legacy systems and processes. Real-time views of exposures, obligations, account balances, and reconciliation, as opposed to delayed processes, coupled with anomaly alerts, credit line usage, and counterparty risk parameters, become key differentiators for financial institutions.

How are firms adapting to T+1? Has the response been better than expected?

Firms have been actively preparing for the shift to shorter settlement cycles for US equities and bonds, driven by the need for greater efficiency and reduced risk in an increasingly unpredictable market. Many institutions are investing in process re-engineering to enable faster settlement times. We consider these changes “necessary but not sufficient” for a firm to declare success. We anticipate that settlement and RTGS systems will globally move towards T+0 for most asset classes within the next five years, further increasing pressures on risk, liquidity, and operational challenges.

We are heading towards a world where, for example, a fund in Asia must meet obligations in EUR, GBP, and USD for trades executed on behalf of clients seeking exposure to these markets. The settlement window may be just a few hours. They will need to conduct an FX transaction efficiently, settle the currencies soon after the trade, and use the proceeds to settle the next leg. In this scenario, back-office systems and current settlement venues, including CLS, will not be sufficient. Relying solely on custody banks would lead to suboptimal FX rates. Firms need to prepare for these market changes. Systems that offer real-time visibility and control will be critical and key differentiators for market participants.

What are the more pronounced bouts of market volatility challenging current liquidity management processes?

This summer has seen considerable market instability, primarily driven by geopolitical tensions and divergent monetary policies. These events have increased risk-taking in complex financial products, directly impacting companies’ risk exposure, settlements, and operational workload. Three factors exacerbate the problem: global market interconnectedness, which spreads instability quickly; the increased trading of riskier, more market-sensitive financial products, and shorter settlement times for cross-border transactions, requiring faster payment processing.

Liquidity pressures have been particularly severe in two key areas. Firstly, emerging market currencies have long struggled with liquidity, prompting businesses to stagger payments and schedule transactions to avoid exhausting available funds. Secondly, even in more stable currency markets, intraday liquidity remains a challenge. With interest rates still elevated, it is crucial for companies to maintain clear visibility of their balances and access collateral-backed funds. This creates opportunities for banks that manage cash reserves effectively. The current market for intraday short-term lending and currency exchange remains in its infancy, but we believe this area will grow significantly due to strong demand.

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The new offering will enable firms to reduce their financing costs elevated by interest rate normalisation, alongside offering a way to address increased regulatory focus on financial resilience.

The tools will equip treasury managers with a dashboard showcasing real-time insight into how individual counterparties are impacting liquidity across all business lines.

Through the provision of real-time firm-wide visibility and control across all available liquidity sources, the new tools will help improve forecasting, leading to better informed decision-making and speedier adjustments of liquidity strategies.

Treasury managers are also able to analyse individual liquidity flows and trace contributing factors to improve understanding of the impacts different events have on their own liquidity profiles and those of their counterparties.

In addition, the integration of real-time data with historical models will allow the automatic adjustment and optimisation of payment strategies, as well as immediate detection of deviations in market or counterparty client behaviour, highlighting potential credit crunches or liquidity issues.

“Recent market events underscore the urgency for a significant shift towards real-time treasury management,” said Arjun Jayaram, founder and chief executive of Baton Systems.

“With regulators more focused than ever on financial resilience, we’ve designed these tools to enable treasury managers to develop more robust liquidity strategies, to easily access the critical information needed to make informed decisions fast and rapidly adjust strategies to effectively respond to and proactively optimise resources as market conditions change.” 

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The move will enable JSCC’s clearing member clients using the Core-Collateral platform to have direct access to the largest central counterparty clearing house (CCP) in Asia Pacific (APAC).

The addition builds upon the existing integration with SGX, increasing the network of APAC CCPs accessible through Baton.

Through the direct connectivity, clearing members will receive normalised data from Baton directly from the CCP, avoiding the need to receive files via clearing members.

According to Baton Systems, this enhances efficiency and enables the clearing member to receive real-time balances with the ability to check eligibility and then to instruct and move cash and non-cash collateral to JSCC.

“The addition of JSCC to the Baton Core-Collateral ecosystem is a big step to increasing access to the most strategically important CCPs for our clients. As a result, we are able to assist more FCMs and clearing members globally to automate and optimise a significant proportion of their collateral holdings,” said Tucker Dona, head of business development and client success at Baton Systems.

“This is incredibly important in helping these firms reduce dependency on manual processes and optimise collateral management at a time when market volatility and a higher interest rate environment place growing pressure on the margin posting process.”

Users of Baton’s Core-Collateral are now able to automate and expedite the movement of cash and securities across 13 CCPs. This can be done via a single platform which also consolidates and normalises real-time updates related to required margin, sources of collateral, and eligibility profiles.

Elsewhere, collateral eligibility data for JSCC will be integrated into Baton’s eligibility application programming interface (API), enabling automated, real-time recognition of which assets can be used as collateral. This will help improve the collateral management process for users alongside helping meet compliance with CCP requirements. 

“We are delighted to work with Baton Systems on this collaboration. This will provide our clearing members with greater post-trade operational efficiency, through Baton’s ability to provide real-time intraday balances and an enhanced methodology of moving collateral,” said Yasuhiko Tamura, executive officer of OTC derivatives clearing services at JSCC.

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The launch of the new OSTTRA service follows the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) advocated an increase in the adoption of PvP in FX transactions to reduce FX settlement risk.

The new PvP service will be delivered on DLT from Baton Systems and will help increase market wide access to PvP, addressing FX settlement risk concerns.

Flows not currently settled on CLS, including non-CLS eligible transactions such as offshore Chinese renminbi, will be the main focus of the service.

Bank and non-bank market participants will also have improved flexibility to settle FX transactions intraday, without being tied to the CLS cut-off window.

OSTTRA stated that it is intended for the service to evolve to include settle-to-market functionality, significantly reducing derivative counterparty exposures, therefore reducing the regulatory capital required under SA-CCR (Standardised Approach to Counterparty Credit Risk).

“There’s huge scope for further post-trade efficiencies across OTC asset classes: this new service represents an important milestone in the evolution of our FX network, extending existing workflows to reduce settlement risk for thousands of OSTTRA clients,” said Chris Leaver, chief strategy and marketing officer at OSTTRA.

As part of the terms of the partnership, OSTTRA will take on the operation of Baton’s Core-FX service, including administration of the rulebook, which governs the end-to-end process and the secure orchestration of funds, alongside providing the framework for achieving final settlement.

Early adopters of Core-FX, HSBC and Wells Fargo, will join the OSTTRA operated serving during the first half of this year.  

“Through this strategic partnership, we will jointly accelerate and globally scale access to PvP settlement whilst enabling the Baton team to continue innovating and deploying operationally resilient solutions that deliver modern, cloud-based interoperable technology stacks that make our markets more inclusive, safer, and more efficient,” said Arjun Jayaram, founder and chief executive of Baton Systems.

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Having gone live with the first central counterparty (CCP) in November, the collaboration will enable the roll out of the solution across Baton’s network, which currently includes 13 clearing houses across EMEA, North America and Asia.

Baton Systems added that the network also comprises more than 94% of cleared margin posted by US registered FCMs [futures commission merchants]. 

As a result of the collaboration, Baton’s Core-Collateral solution has been integrated into JP Morgan’s CCP Margin Exchange (CCPMx). 

Graham Gooden, EMEA head of triparty collateral management at JP Morgan commented “We’re delighted to help clients find increased efficiencies through improved collateral mobilisation in the clearing process.” 

JP Morgan’s collateral and securities finance team has struck a number of partnerships in recent years, collaborating with BlackRock on its collateral mobility network, investing into mobility fintech HQLA^x, and teaming up with Sharegain to bolster its agency lending offering earlier this year.

Its latest partner, Baton Systems, is looking to help market participants in their selection of optimal composition to meet margin obligations, something particularly important in a high interest rate environment.

“Reimagining this process, tri-party clients can now easily aggregate all available collateral across their various sources into a single longbox, automatically select the most cost-effective securities and rapidly mobilise all assets,” said Baton Systems in a statement. “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.”

The fintech said it plans to extend CCP connectivity globally with further CCPs expected to be added in the new year.

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The US Securities and Exchange Commission (SEC) voted to move the settlement cycle from T+2 to T+1 from 28 May 2024, effectively halving the time available to complete the settlement process.

Theoretically, the timeframe reduction minimises the risk of default as transactions are completed more quickly – it also has the capacity to improve liquidity in the market and should lead to an increase in trading volume and potential cost saving thanks to reduced margin requirements.

However, these advantages are dependent on risk mitigation as the market adapts to a T+1 process. The GFXD report claims that settlement fails are possible if related FX trades cannot be completed in the same timeframe, leading to general increased cost of trading.

According to the report, the impact on front office trading desks boils down to the risk that transaction funding which is dependent on FX settlement may not occur in time, and the fact that securities transactions with a related FX trade will require advanced execution of the latter. Additionally, ensuring that trade matching, confirmation and payment all occur within local currency cut-off times is key, as well as awareness of local market closures.

Speaking to The TRADE, Alex Knight, head of global sales and EMEA at Baton Systems, a DLT-based platform for the post-trade processing of assets and wholesale payments, emphasised that “although FX does not fall under T+1, those trading in US securities from outside the US need to factor in time for FX settlement to ensure they have the cash to settle their securities transactions”.

Knight added: “With a shorter settlement window, post-trade processes need to be completed faster, and there is less time to remediate breaks.”

Another factor which the report highlights could adversely affect the ability for trading desks to settle T+1 is an increase in demand for multi-asset trading and settlement capabilities. To combat this, simultaneous execution is proposed, increased process automation of equity and currency trades which together work to expedite the confirmation and settlement process to meet deadlines.

Additionally, the increased risk of executing FX trades against unconfirmed or unmatched equity trades which stems from T+1 timelines will have to be weighed against the operational risks of increased trade amendments or cancellations, according to the report.

The paper suggests that the buy-side should adopt a strategic approach to managing FX risk, in particular highlighting outsourcing currency management – specifically “to specialists who have trading/operations in the major trading time zones, alternate passive or active currency strategies, and 24-5 market access to wholesale FX pricing and liquidity management to assist with best execution.” It also suggests utilising CLS where possible to help lower market settlement risk.

Technologies including DLT, ML and AI are highlighted as contributors to finding solutions to the T+1 US challenge. Knight emphasises how DLT is already making headway in this space: “Automated, safe, and scalable settlements utilising DLT are already in use by some tier 1 banks, helping them to address the roadblocks to efficient trading that will be thrown up by this monumental shift in market structure.

“DLT is already proven as the means to accomplish risk-proof FX settlements for cross-border transactions, bringing the speed, transparency, choice, auditability, and non-repudiation required by market participants today.”

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Elsewhere, Edward Redmond joined RBC as director, cash equities sales, global clients. He joined the bank from Artemis Investment Management, where he served as an investment director and product specialist. He brings more than 20 years’ experience working at both the buy- and sell-side, having held positions at Citi, Credit Suisse, Goldman Sachs and William Blair, where he specialised in selling US product. As part of his new role, Redmond will focus on driving global advisory product into UK clients.

Post-trade and blockchain technology provider Baton Systems appointed Ravindra Madduri as its new global head of product. Madduri joined Baton Systems from fintech Paysend, where he served as head of enterprise B2B products. He brings considerable experience in payments and cash management to the firm, having spent most of his career in product functions at banks such as Citi, ABN AMRO, RBS and Barclays. As part of the role, Madduri will focus on ensuring that the firm’s overall product strategy is aligned with client requirements and the growth trajectory of the firm.

Historical Level 3 data and analytics provider BMLL appointed Jenny Chen as head of sales, Americas. She joined the firm from big xyt, where she served in the same role. Prior to that, Chen spent eight years at Société Générale in a variety of senior positions including managing director, head of global execution services, Americas. Before that, she served as the bank’s head of global portfolio sales trading and electronic services. Previously, Chen spent seven years at Goldman Sachs and two years at UBS in global portfolio trading roles.

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Madduri joins Baton Systems from fintech Paysend, where he served as head of enterprise B2B products.

He brings considerable experience in payments and cash management to the firm, having spent most of his career in product functions at banks such as Citi, ABN AMRO, RBS and Barclays.

Madduri will be based in London, reporting directly to Arjun Jayaram, chief executive of Baton.

As part of the role, Madduri will have an immediate focus on ensuring that the firm’s overall product strategy is aligned with client requirements and the growth trajectory of the firm.

In addition, he will be involved with all aspects of the product lifecycle, including product management, delivery and design management.

“With over two decades of experience in building products, Ravi has a proven track record of delivering reliable and high-quality products for large banks and corporations,” said Jayaram.

“With Ravi’s leadership and strategic vision, we are well-positioned to scale our product offering to nearly a thousand clients over the next few years and meet the growing market demand in a rising interest rate environment.“

Madduri’s appointment follows that of Alistair Griffiths, who was named director of EMEA sales in November last year. Griffiths joined from FIS Global, where he served as senior sales executive of post-trade solutions, responsible for sales in the UK, Channel Islands and the Netherlands.

“The massive interest from the market in Baton’s solutions was one of the key drivers that made this move such an attractive proposition,” said Madduri.

“I’m incredibly excited to get to work with Arjun and the wider Baton Systems team to support financial institutions to adapt to the trading conditions of 2023 and beyond.” 

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Baton Systems appointed Alistair Griffiths as its new director of EMEA sales. Griffiths joined from FIS Global, where he served as senior sales executive of post-trade solutions, responsible for sales in the UK, Channel Islands and the Netherlands. He brings considerable experience to Baton Systems, having also previously served at BNY Mellon and BlackRock. Most recently, he served as BNY Mellon’s vice president, relationship manager and prior to that, served as production manager at BlackRock. Based in London, Griffiths reports to Alex Knight, global head of sales, with a focus on new business acquisitions across all Baton solutions in the region.

Goldman Sachs appointed Adesh Choraria as an executive director in equity sales. Choraria joins the investment bank from Morgan Stanley, where he held an equity derivatives sales position for five years. Prior to that, he served at Deutsche Bank for three years in a similar role. Earlier in his career, Choraria spent nearly a year at Knight Assets & Co. in a global equities position, and before that, served in another equity derivatives role at Commerzbank AG.

Plato Partnership added UBS Asset Management’s Lynn Challenger to its board of directors. Challenger holds over 25 years’ experience in capital markets, multi-asset trading, technology, best execution and investment operations. He currently serves as managing director, global head of trading and order generation at UBS Asset Management, where he has spent the last six years. Prior to that, Challenger spent nearly a year at Bridgewater Associates as head of execution – trading. Challenger also previously served on the board of directors at San Francisco-based, non-profit organisation, March of Dimes.

Trading software and liquidity services provider Finalto named Andrew Biggs as group head of risk and trading. Biggs has been promoted to the role after serving as head of liquidity and systematic market making at Finalto since May 2018 – a position he maintained after the acquisition and rebrand of CFH Clearing to Finalto. Before joining CFH Clearing, Biggs served as head of liquidity and risk analysis at IS Prime, and prior to that, held the position of head of electronic trading solutions at the firm. Earlier in his career, Biggs served in an institutional sales role at Sucden Financial and before that as a sales and relations executive at ICM Capital before eventually assuming the role of UK sales and relations manager.

Melbourne-based superannuation fund, AustralianSuper, appointed Nina Marsh as a senior equity dealer. Marsh joins the firm from Liberum, where she spent the last 14 years, most recently as an equity sales trader. Prior to that, she spent eight years at Deutsche Bank, serving in the same role.

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