Paxos, the regulated blockchain infrastructure platform for enterprises, continues driving value for its commodities market clients through its Post-Trade and Settlement solutions. Financial institutions that deploy Paxos’ Post-Trade and Settlement solutions see an average 300% return on investment (ROI) within two years due to enhanced back-office efficiency, new data has revealed.

The solution enables firms to fully automate the management of their entire precious metals post-trade lifecycle, with Paxos’ platform offering multilateral payment netting and simultaneous settlement for the unallocated, over-the-counter (OTC) precious metals market. This boosts operational efficiency, reduces the amount of funds leaving accounts, unlocks working capital and greatly reduces counterparty risk.

Historic and live precious metal trade data indicates companies that engage with Paxos Post-Trade and Settlement can reduce obligations by an average 80%, while achieving cost savings equivalent to five basis points of their annual settlement obligations as a result of increased network efficiency – similar figures to those generated by continuous linked settlement (CLS) in foreign exchange markets.

The cost-saving potential of Paxos’ offering comes at a particularly challenging time for the back-office departments of financial institutions, with many scrambling to ensure they can facilitate the surging precious metals trading volumes witnessed over the last three years. A recent study conducted by the strategic consulting and market research firm BlueWeave Consulting revealed the global precious metals market is projected to grow at a compounded annual growth rate of 8.1%, offering market participants record revenues of around $415.3bn by the end of 2028 and driving trading volumes yet higher.

The cost of borrowing has also increased substantially, with inter-bank rates rising from 0.06% to 4.9% - meaning the cost of borrowing metal is now almost equal to borrowing cash. Additionally, fast-evolving industry regulations, such as the US Securities and Exchange Commission’s determination to reduce the securities settlement period from T+2 to T+1, is dominating resource focus and squeezing company balance sheets. The budgets of many firms have subsequently come under increasing scrutiny over recent months, with funding for strategic projects typically subject to robust ROI requirements.

Anousha Rayner, Head of Commodities Growth at Paxos, commented, “The commodities market has lagged the likes of equities in terms of settlement infrastructure and efficiency for far too long – but the tides are now turning. Paxos is leading the way in achieving greater efficiency in the precious metals market, with some of our clients already realising billions of dollars’ worth of reductions in their settled trades and millions on funding cost savings. Our solution is also helping to future-proof users against rapidly shifting regulations around settlement, such as the move to T+1 settlement in the US, with Paxos’ technology permitting clients to settle precious metal trades within a day. Indeed, as pressure mounts on back-office departments across the industry, Paxos’ solution offers much-needed relief at a crucial time.”