“While the over the counter (OTC) market offers many benefits, it also creates operational complexity and introduces settlement risk for participants.”
Paxos has reported nearly $50 billion in settlement volumes processed by the Paxos Settlement Service for Commodities, which handles the settlement process for market participants across gold, silver, platinum and palladium.
The Paxos Settlement Service allows for a centralized operational process for settlements with counterparties that are both on and off the Paxos network.
OTC market creates operational complexity and introduces settlement risk
Anoushka Rayner, Paxos’ Head of Commodities Growth, said: “While the over the counter (OTC) market offers many benefits, it also creates operational complexity and introduces settlement risk for participants. The lack of standardization and optimization leaves firms open to unnecessary risks as settlement occurs via different networks.
“However, those risks can be mitigated with the right technology. The Paxos Settlement Hub for Commodities is the first platform to connect the metals and cash settlement networks. Due to the Paxos Trust Company underpinning settlement, payments are easily managed and errors are minimized. Furthermore, funds are also securely held in a bankruptcy-remote account, fully segregated. Paxos makes settlement transparent and seamlessly controls the swap of metals and cash.”
The firm boasts the Settlement Hub, which delivers settlement with full transparency on the movement of both metals and cash in a single user interface. The service connects the London Precious Metals Clearing Limited and the cash-based correspondent banking network to allow customers to pre-fund and multilateral net settlements, creating a single platform where settlement occurs for both metals and cash.
Paxos is a regulated blockchain infrastructure platform that aims to open the financial system toward efficiency and speed and unlock trillions of dollars that are currently in inefficient, inaccessible, and outdated financial plumbing. Paxos pledges to replatform the system to allow assets to instantaneously move anywhere in the world, at any time.
The firm, which has raised more than $540 million so far, uses blockchain to tokenize, custody, trade and settle assets. Paxos has built enterprise blockchain solutions for PayPal, Interactive Brokers, Mastercard, MercadoLibre, Nubank, PicPay, Bank of America, Credit Suisse and Societe Generale.