FIA Tech, a provider of financial technology solutions for the futures industry, has revealed plans to accelerate brokerage payments and shorten the settlement cycle for customers on its Atlantis platform through a partnership with Baton Systems, a fintech startup that specializes in payments technology.
Atlantis currently processes brokerage operations for 46 firms in 17 currencies, facilitating calculation, invoicing and payment. Typical volume ranges between $40 million and $60 million per month between brokers.
However, while Atlantis has improved speed and accuracy in settlement, it remains reliant on a traditional month-end invoicing process. As a result, final payments are not exchanged until 25 to 50 days after a trade's execution. FIA Tech's partnership with Baton is focused on accelerating that leg of the brokerage process.
"Historically, there has been an invoicing cycle where brokers execute for the client all month long and then you send the invoice with 30-day payment terms once the month is closed," said Nick Solinger, FIA Tech's chief executive. "A lot of the surrounding processes have changed, but the payment paradigm hasn't."
FIA Tech launched Atlantis four years ago to clean up and automate the invoicing process, he noted, and it took the industry time to adapt to continuous calculation of fees on a trade level and on a daily basis. "Now that we're there as an industry, we can address the payments piece and move beyond the once-monthly settlement cycle," Solinger said.
The Baton implementation on Atlantis will integrate with the SWIFT payment network, and is expected to launch in the third quarter of 2020. Longer term, FIA Tech plans to integrate data from the Baton payment cycles into the Atlantis platform to offer greater transparency and flexibility. That includes plans for a function that allows payers and receivers to specify their preferred payment frequency.
Though Baton was founded in 2016, it has quickly built a strong reputation in the derivatives industry. The company, then known as Ubixi, was selected as one of five fintech startups selected as finalists for the 2016 FIA Innovator of the Year award. Baton founder and CEO Arjun Jayaram previously worked at vice president of technology at Dwolla, a payments transfer platform backed by CMEGroup's venture capital arm. Andres Choussy, Baton's current president and chief operating officer, previously served as head of derivatives clearing for the Americas at J.P. Morgan and CEO of post-trade processing firm Traiana.
In January, Baton received an additional $4 million in funding from Illuminate Financial, a London firm that invests in early stage fintech companies, and said it will use the funding to accelerate its efforts to build its business in Europe. The company opened a London office in November and hired Alex Knight, a sales executive from the foreign exchange prime brokerage arm of Citi, as regional head.
Solinger said FIA Tech's shared passion for innovation and efficiency made the current partnership on brokerage payments a perfect fit. And beyond the near-term implementation of a brokerage solution, he said there may also be potential for Baton and FIA Tech to team up on other efforts such as streamlining payments and collateral for clearing.
"We always want to streamline and accelerate payments. We want people to get their money faster because there's a time value of money and there's a balance sheet improvement if we speed things up," Solinger said.