With higher volumes but smaller ticket sizes in the foreign exchange (forex) industry making many post-trade solutions unaffordable, Cobalt, which is FX infrastructure based on shared ledger and high-performance technology, announced this Monday that it is now live with Deutsche Bank, XTX Markets and Saxo Bank.
The purpose of Cobalt is to redesign post-trade forex infrastructure and processes. To do this, the system’s automated technology matches all versions of a trade into one ‘trusted copy.’
By creating a trusted copy, the infrastructure generates one unchangeable data set of FX transactions. This is at odds with the current industry practice, where a single trade today creates multiple records for all parties. This leaves more room for error and inconsistencies throughout lifecycle events.
Commenting on the launch of the new platform, Russell LaScala, Co-head of Global FX at Deutsche Bank said: “The two biggest business issues banks face today are managing risk and the scaling of their business with the rise of smaller tickets.
“Cobalt’s solution ensures we can reduce operational risks associated with legacy systems and slash the cost of processing tickets for our entire FX business using a single platform.”
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Cobalt is onboarding more financial institutions
Cobalt has launched its post-trade infrastructure with the help of more than 20 leading financial institutions. At present, many of these companies are being onboarded to the platform.
“As an institution with daily trading volumes of $150 billion, it’s vital we use the best technology to maximise efficiency and reduce costs. We have partnered with Cobalt as it is a neutral, independent market facilitator that offers the functionality and sophisticated technology we require to scale our business,” added Mike Irwin, COO at XTX Markets.
According to the statement released today, because Cobalt has created a single and standardised view of each transaction, clients of the platform can manage services such as aggregation and netting all in one place, thus, reducing duplication and position exposures.
“As an institution that deals with high volumes of small ticket FX trades, we incur substantial cost from our back-office processes,” Henrik Villberg, Global Head of Trading & Market Access, at Saxo Bank highlighted.
“It is in our interest therefore, to look at solutions to create efficiencies in this area. We are happy to adopt Cobalt’s processes that address this, whilst providing transparent and lower costs.”
Shared infrastructure is the future of post-trade FX
Speaking on the launch, Darren Coote, CEO of Cobalt stated: “Having the backing of these three different FX players, one an established bank which has been innovating for over 20 years, a new breed of electronic market-maker and a technology pioneer in banking and retail trading technology, demonstrates that shared infrastructure is the future of post-trade FX.”