Goldman Sachs Transaction Banking recently partnered with capital markets technology derivatives services provider Derivative Path to offer regional and community banks access to in-house foreign exchange (FX) capabilities in markets they historically did not have access to.

The partnership closes the gap between major Wall Street firms and regional and community banks by targeting small and midsize institutions, and providing them access to FX payments at a time when they’re looking to diversify their portfolios. 

Derivative Path and Goldman Sachs Transaction Banking “both recognized the need to bring a global payments solution that offered streamlined workflows, pricing transparency, real-time rates, and secure tracking to the regional and community bank market,” Brinda Bhattacharjee, chief operation officer of Goldman Sachs Transaction Banking, told Bank Automation News.

Walnut Creek, Calif.-based Derivative Path, which offers its cloud-based solution DerivativeEDGE, recently added the management of international payments and FX to its platform, Head of FX Darsh Mariyappa told BAN. “We had a ton of success on the rate side, and it was a natural progression to add FX.” 

The company’s FX product allows clients to log onto the cloud-based platform and book their own trades across the suite of offerings, including spot, forward, windows, swaps and NDF, Mariyappa said. The addition of the Goldman Sachs Transaction Banking application programming interface-based (API) platform allows clients to seamlessly complete end-to-end international payment transactions.

In adding FX to the Derivative Path platform, the next step was “to provide access to spot FX liquidity, and we need to do that with a partner … that’s where our discussions with Goldman Sachs started,” Mariyappa said.

Through the partnership, Goldman Sachs provides an API connection to executable live FX pricing to Derivative Path clients, Mariyappa said. “In the core system, we provide indicative spot FX pricing that is not executable. With a bank and the API execution we provide, a client bank can actually trade and execute within DerivativeEDGE.”

“Derivative Path was able to seamlessly embed our foreign exchange and global payments solution into their platform via API, allowing their clients to gain access to our full international payments capabilities,” Bhattacharjee said.

Goldman Sachs has been a dealer for Derivative Path clients for eight years, “so we had a long-standing relationship specific to the interest rate derivatives team,” Mariyappa said. The financial institution was also starting to move into the regional and community bank space by providing correspondent banking services to that sector, “it was just a great coincidence.”

Derivative Path, which was founded in 2013, completed a $35 million funding round in 2020 led by FTV Capital, Mariyappa said. The company has grown 80% in the past two years and works with nearly 170 regional and community clients.

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