Cobalt, the foreign exchange infrastructure based on shared ledger technology, is now live with Deutsche Bank, XTX Markets and Saxo Bank.
Darren Coote, CEO of Cobalt, says, “Having the backing of these three different FX players, one an established bank that 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.”
Cobalt has been developed to re-engineer post-trade FX infrastructure and processes. Its automated technology matches all versions of a trade into a single ‘trusted copy’, freeing up post trade resources from multiple layers of reconciliation and cost; generating one immutable data set of FX transactions from which Cobalt and third parties can provide multiple services.
“The two biggest business issues banks face today are managing risk and the scaling of their business with the rise of smaller tickets,” says Russell LaScala, co-head of global FX at Deutsche Bank. “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.”
Cobalt says it worked with more than 20 leading financial institutions, many of which are currently being onboarded, to develop a solution designed for today’s markets where higher volumes but smaller ticket sizes make existing solutions unaffordable.
Current post-trade service providers, particularly in the prime brokerage market, can often rely on fragmented, manual processes and dated legacy technology. Under this regime a single trade creates multiple records of the same deal for all parties, introducing inconsistencies throughout lifecycle events and room for error. By creating a single, standardised view of each transaction, Cobalt believes clients can manage services such as aggregation and netting via a single platform, dramatically reducing duplication and position exposures. From analysis using executed trade data, Cobalt has been able to provide clients with over 50% in cost savings across the FX lifecycle.
Mike Irwin, COO at XTX Markets, says, “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.”
On the prime broking side, Dave Reid, global head of FX prime broking at Deutsche Bank, says, “Utilising Cobalt’s netting and aggregation service means we can more efficiently manage our bilateral and triparty transactions, reducing our exposure to risk and excess ticket processing.”
Henrik Villberg, global head of trading and market access, at Saxo Bank adds, “As an institution that deals with high volumes of small ticket FX trades, we incur substantial cost from our back-office processes. 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.”