Cobalt, a foreign exchange software provider, has released a new low latency credit management platform.
According to an official press release dated today, the platform will reduce risk for FX traders. It uses advanced technology to control credit and associated market access rules throughout the trade lifecycle in real-time.
The service was developed to overcome a credit shortage in the market. The number of credit providers has shrunk over the last few years because they continue to suffer losses due to defaulting customers. This is largely because credit could not be found in real time and “the party with the credit risk is often the last to know.” The new service offers central real-time credit management as a way to overcome this issue.
Cobalt guarantees a messaging speed of over one hundred thousand messages per second, which is possible because it is situated geographically close to main execution venues.
It can handle client reactions to unpredictable events because “it can be pushed dynamically to clients and trading venues in real-time.”
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This is important because such events can cause millions of dollars to be lost.
Andy Coyne, co-founder and CEO of Cobalt, said: “Electronic trading has evolved beyond recognition over recent years, and it’s now critical that credit management catches up. Centralised low latency credit management is the future for the global FX markets and we look forward to leading the charge in creating a more efficient, orderly future for all participants.”
Darren Coote of Cobalt’s advisory board said: “Credit is the lifeblood of the global FX markets, but if it’s not managed properly it can have catastrophic consequences for prime brokers and their clients. These institutions are plagued by enough risks already in today’s challenging market conditions – credit management should not be one of them.”
Cobalt is a company that uses distributed ledger technology to make foreign exchange trading more secure and streamlined. Cobalt BlueSky is one product that it offers. It notarizes, encrypts and securely stores foreign exchange contracts. It also offers tools for risk management and post-trade services. In May we reported on Cobalt when it secured investment from Singapore Exchange.
The new platform is currently being beta tested and should be available later this year.