Today, post-trade foreign exchange (FX) distributed ledger platform Cobalt announced it is now live with Deutsche Bank, XTX Markets and Saxo Bank as first clients. The launch follows IHS Markit’s $5 million (£4 million) investment in the startup earlier this year, giving Cobalt access to over 800 FX counterparties which use the MarkitSERV global network.
A key differentiator is Cobalt supports both aggregation and netting reducing the number of transactions that need to be settled.
Conventional post-trade settlement reconciliation is slow. Legacy systems employ manual processes which can introduce errors, resulting in longer delays between parties involved. This also increases the back-office costs related to FX transactions.
With distributed ledger technology (DLT), errors such as duplication of data can be avoided. The DLT provides a single platform for all the transaction data to be stored transparently, to be viewed by permissioned members. Cobalt claims to provide clients 50% in cost savings across the FX lifecycle.
“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,” said Russell LaScala, Co-head of Global FX at Deutsche Bank.
Darren Coote, CEO of Cobalt said: “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.”
Just today, London-based Fnality announced its adoption of the Utility Settlement Coin (USC) for intraday FX swaps on the Finteum platform.
Last year, CLS launched its blockchain foreign exchange netting solution CLSNet with Morgan Stanley and Goldman Sachs as initial clients. CLSNet was developed in collaboration with IBM.