IHS Markit (Nasdaq: INFO), a provider of information, analytics, and financial market data, has taken an undisclosed minority stake in London-based technology business Cobalt, which aims to modernize transactions settlement in the FX market. The startup initiative leverages blockchain technology to reduce risk and cut post-trade costs by up to 80 percent, the UK group claims.
The move comes as big players in the financial sector are increasing their wager that distributed ledger technologies like blockchain will be the key to leadership in the future.
The Cobalt DL technology is designed to integrate existing infrastructures and creates multiple trade records for buyers, sellers, brokers, clearers and third parties. By creating a single and shared view of a transaction, Cobalt DL aims to free up back and middle office resources that are currently overwhelmed by multiple unnecessary license fees, ticketing charges, IT overheads and staff costs. Its technology is being part-supplied by First Derivatives, a Northern Ireland company that is also an investor.
IHS Markit joins other prominent investors in the UK startup, including Singapore’s exchange and Citigroup, one of the world’s biggest FX trading banks.
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Markit Teams with Cobalt to Re-engineer FX Post-Trade
MarkitServ, IHS Markit’s post-trade OTC derivatives processor, announced earlier this week that it has connected to Cobalt in a bid to deliver new post-trade processing services for the foreign exchange (forex) markets.
MarkitSERV is one of the most widely-used electronic processing services for OTC transactions and FX STP integration. The platform provides end-to-end processing and workflow services across over the counter derivatives asset classes, including credit, equity, foreign exchange, and interest rates.
Adrian Patten, co-founder and chairman of Cobalt, said: “For too long, FX has been burdened by an aging, inefficient post-trade environment. Our high performance technology has been designed to replace legacy infrastructure and inefficient processes, as well as significantly slash cost and risk for this five trillion dollar a day market.”
Chris Leaver, managing director and head of FX at MarkitSERV, added: “The majority of the FX industry is already integrated with the MarkitSERV network and we now offer the community turn-key access to the Cobalt platform and the opportunity to radically streamline post-trade workflows.”