Cobalt DL, a fintech startup co-founded by former Traiana CEO Andrew Coyne and former Mako FX owner Adrian Patten, has commenced beta testing with a private peer-to-peer network that uses distributed ledger (blockchain technology) to significantly cut post-trade cost and risk.
The Cobalt DL team says that after a year of design and testing and following a successful completion of a proof-of-concept with one of the largest FX market making banks, the platform will launch in 2017, with eight institutional FX participants already committed to the service.
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They explain that from a single transaction, existing post-trade infrastructure creates multiple trade records for buyer, seller, broker, clearer and third parties. By creating a single, shared view of a transaction, it frees up back and middle office resources that are currently overwhelmed by the need for continuous reconciliation across multiple systems.
The technology is designed to integrate seamlessly with all trading sources and venues, providing immediate efficiency benefits which Cobalt DL’s analysis has shown to deliver a significant cost reduction when compared with existing infrastructure. They consider that FX market participants incur multiple unnecessary license fees, ticketing charges, IT overheads and staff costs as a result of the complexity of existing structures.
Global financial technology specialist First Derivatives has invested and partnered with Cobalt DL, providing services to further develop the technology. Cobalt DL will license First Derivatives’ Kx technology, a market-leading big data solution, as a core part of its platform.
Coyne commented: “The emergence of agile, sophisticated technology such as distributed ledgers has set the scene for an alternative to the inflexible post-trade infrastructure that financial market participants are forced to use today. Cobalt DL’s combination of market expertise and forward-thinking technology is dramatically shaking up the post-trade space and significantly reducing costs for market participants.”